The Reserve Bank of New Zealand (RBNZ) delivered its latest OCR cut today of 25 basis points sliding it down to 3.50%.
This update was accompanied with a Monetary Policy Review (not the more detailed Statement due on May 28). A further cut in May remains expected, but beyond that, future decisions will depend heavily on the Banks assessment of incoming economic data.
With uncertainty around the global growth outlook due to inflation pressure, fuelled in part by escalating trade tariffs, central banks around the world are re-assessing what comes next in their policy. Economists have suggested the tariff hit to global growth may mean the RBNZ needs to cut the OCR below its current projected end point at 3%. We’re speaking to clients who are seeking certainty, about whether now is the right time to fix their mortgage rates around the 4.99% rate for 1-2 years.
As we have all heard this week, a 10% U.S. tariff on New Zealand exports was introduced by President Donald Trump. While its direct inflationary impact is limited, these measures do dampen our GDP potential by affecting our trading partners. Trade volatility is likely to persist in the short term, and impacts on New Zealanders KiwiSaver Funds may continue to be negative. For the New Zealand property market, the investment case if anything has gotten stronger. Supply and demand remains balanced in favour of buyers and the stable, predictable cashflows that come from property combined with its lower volatility provide certainty to investors in times when listed investment markets are reacting based on fear and uncertainty.
Housing Market Recovery Gaining Traction, Albeit Cautiously
CoreLogic’s latest data indicates growing momentum in the property market. National home values rose 0.5% in March, building on a 0.4% rise in February. While cities like Dunedin (-0.1%) and Tauranga (0.0%) showed minimal movement, key centres including Auckland (+0.6%), Christchurch (+0.8%), and Hamilton (+0.9%) posted solid gains.
Lower mortgage rates are clearly providing support to housing demand, and property has historically proven to be a stable and reliable investment option for many New Zealanders – far less volatile than the stock market or shares. However, it’s not yet a seller’s property market. Listing volumes remain high around the country, the broader economy is still subdued, and tighter debt-to-income lending criteria may be affecting buyer capacity.
We continue to project a modest 5% increase in national property values this year, a softer pace than previous market upswings. For long-term investors and first-home buyers alike, this more balanced growth may present a healthier, more sustainable environment. Some first home buyers might be anxious about the impact of U.S tariffs on their KiwiSaver and the ability to use KiwiSaver funds as part of a home deposit – but we recommend to be patient and try not to react, as there is a lot priced into markets already.
Shift Toward Longer Mortgage Terms Likely
New data on loan term selection is expected shortly, and we anticipate some borrowers may now be moving towards 2–3 year fixed terms. In January, shorter-term and floating rate loans were still dominant, but with sub-5% rates appearing in February, many may now be locking in greater certainty.
If you’re unsure about how to structure your home loan, now is a good time to speak with one of our Advisors to explore your options.
Business Confidence Remains Encouraging
ANZ’s latest business confidence survey revealed continued strength in sentiment through March. This is a promising sign for employment and investment activity in the months ahead. However, we are still in the early stages of economic recovery in New Zealand and offshore developments, particularly around our trading partners, will be key to ensuring confidence continues to build amongst our business community,
New Dwelling Consents Hold Steady
Stats NZ reported that new dwelling consents fell 8% year-on-year in February. However, January’s figures had shown an 11% increase, suggesting this is likely short-term volatility rather than a reversal of the trend. The 12-month rolling average remains stable between 33,500–34,000, a level well above historical norms.
From a long-term investment and planning perspective, the supply pipeline remains robust, helping to alleviate housing pressure and support price stability. Stock markets can fluctuate between 3-15%, but property generally remains stable around a 5% growth mark making it a great investment option.   Â
The financial landscape is evolving, and while some uncertainty remains particularly globally, there are also opportunities. Whether you’re reviewing your mortgage, planning a property investment, or assessing your financial position, we’re here to help you make confident, informed decisions.
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