Today, the RBNZ cut the OCR to 4.25%, reducing it by 50 basis points. It’s been an active second half of the year, with two OCR reductions in recent months – August reducing 25bp from 5.50% to 5.25%, then 50bp in October from 5.25% to 4.75%.
Today is the final change of the year and the next review is February 2025.
Kiwibank and ASB cut their rates within minutes of the update today. Kiwibank cut its variable home loan and business lending rates. They cut 50 basis points off their variable and offset loan rates and will drop their revolving loan rate.
ASB’s variable home loan rate has been cut by 50 basis points. ASB has also dropped it’s business and rural lending rates.
ASB’s Executive General Manager Business Banking Rebecca James said “its service test rate for home loans would now drop to 7.6% from Monday”.
Yesterday, ANZ eagerly cut their fixed-term home loan rates early forecasting a drop today – with 26 points shaved off its six-month rates, and 20 basis points reduced from its one-year and 18-month rates. They also cut term deposit rates by up to 25 basis points.
The RBNZ are expecting economic growth to recover next year, as lower interest rates encourage investment and other spending. Retail NZ said it was hopeful the announcement would improve consumer confidence in the run-up to Christmas.
“A turnaround in the economy can’t come soon enough for the retail sector, so we are delighted at the Reserve Bank’s decision to cut the OCR by 50 basis points to 4.25%,” Retail NZ Chief Executive Carolyn Young said.
Employment growth is expected to remain weak until mid-2025 and, for some, financial stress will take time to ease.
The Monetary Policy Committee reviews the OCR 7 times a year. The RBNZ uses the OCR to achieve and maintain price stability. To keep prices stable, the Government has set us an inflation target between 1% and 3% over the medium term with a focus on the 2% midpoint. The RBNZ has explained that the annual consumer price inflation has declined and is now close to the midpoint of the Monetary Policy Committee’s 1 to 3 percent target band. Inflation has fallen to 2.2%.
Get these dates in your calendar for next year:
- 19th February – Monetary Policy Statement & OCR
- 9th April – Monetary Policy Review & OCR
- 28th May – Monetary Policy Statement & OCR
- 9th July – Monetary Policy Review & OCR
- 20th August – Monetary Policy Statement & OCR
- 8th October – Monetary Policy Review & OCR
- 26th November – Monetary Policy Statement & OCR
Today’s update is positive news for mortgage holders who are ready to refinance, refix or move from floating to one of these attractive new fixed rates.
In terms of investment, the property cycle indicates we are still in stage 7 of the cycle – with interest rates lowering and the economy stimulated again, 2025 could be a great time to invest in property.
Speak to one of our Financial Advisers about how you could use the latest OCR cut and lowering interest rates to get yourself in a better financial position. Our Advisers still have space prior to the holiday period.
Sources:
https://www.rbnz.govt.nz/hub/news/2024/11/ocr-425-ocr-lowered-further-as-inflation-returns-to-target
https://www.nzherald.co.nz/business/official-cash-rate-live-updates-reserve-bank-to-reveal-ocr-decision-how-far-will-rates-fall/XWGHKVVH5ZCOPF7LTQZY33BPA4/
https://www.interest.co.nz/borrowing
https://www.rbnz.govt.nz/monetary-policy/monetary-policy-decisions
