NZ mortgage rates may rise again soon
In: Lending News

New Zealand economists were served another surprise this week when – defying most bank forecasts – the Reserve Bank elected to keep the Official Cash Rate (OCR) on hold at 1 per cent.

Up to that point, most banks had been predicting a 25 basis-point cut in November with further cuts next year, but the latest OCR decision may have thrown these forecasts into doubt. Markets are currently pricing a 20 per cent chance of another cut in February, and a 50 per cent chance of a cut in November 2020.

“What we have made very clear is we believe monetary policy is very stimulatory and that we will have to keep it at that position for a prolonged period of time – and that if circumstances change we will act,” said RBNZ Governor Adrian Orr.

Right after the OCR announcement, wholesale interest rates jumped, pushing up the odds of a forthcoming increase in mortgage rates“That is going to be for the retail banks themselves to decide,” Orr pointed out, speaking at a press conference. “There’s plenty of margin involved in lots of business competitive decisions. One, how the official cash rate feeds through into market expectations and forward pricing, and two how pricing feeds into a competitive banking sector, and what they do with mortgage rates.”

Meanwhile, a lot of mortgage rate re-fixing is likely to happen in the coming months as the bulk of New Zealand homeowners take advantage of low mortgage rates. The other good news is that, even with the OCR pause, mortgage rates are expected to remain low for a long time. And it’s evident from activity in the market that first-home buyers and investors are taking notice.

As head of Trade Me Property, Nigel Jeffries put it, the housing market just “sprang into action.”

Demand is surging and so are new listings, but housing supply remains low – which means property prices are climbing. In October, ten of 15 New Zealand regions saw record asking prices and the total number of views of property listings on Trade Me was up 12 per cent, compared to September.

Source: Trade Me Property Price Index

Taking out the right home loan is crucial for those who have plans of purchasing a home or even for those who are thinking of refinancing. And now is a good time to take action. If you know of any New Zealand buyers who are looking to make a property move, and need the mortgage to make it happen on their terms, please get in touch. Our Mortgage Link advisers have access to a wide variety of banks and non-bank lenders, and can therefore source the loan that suits their specific situation.

To get in touch with the team at Mortgage Link, please contact:

Josh Bronkhorst
[email protected]
021 835 506

 

Disclaimer: In preparation of this publication all care has been taken, however no warranty is provided as to the accuracy of the information and, as such, no responsibility is taken by Pivotal Financial for any errors or omissions.

This publication does not constitute personalised financial advice, may not be relevant to individual circumstances and should not be seen to constitute a recommendation of any description. Before taking any action in relation to matters dealt with in this publication please seek Professional Financial Advice.

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