Historical Archive
Who Controls the Interest Rate?
The Reserve Bank of New Zealand (RBNZ) significantly influences home loan costs by controlling the Official Cash Rate (OCR). Following the global pandemic, the RBNZ raised the OCR substantially. In May 2020, it stood at 0.25%, but at the time of writing, it reached 5.5%-still below the 8.25% peak in 2008, yet a dramatic increase from lows recorded just three years earlier.
What Will Happen with Interest Rates in 2024?
Most experts believe home loan interest rates have approached their peak for this cycle. Several factors support this outlook:
After-Pandemic Recovery: As the world and New Zealand recover from pandemic disruptions, loan costs typically increase.
Price Increases: The RBNZ aims to control rapid price escalation. Continued inflation may prompt further OCR increases in 2024.
Global Influence: International economic conditions affect New Zealand's mortgage rates.
What Might Change This?
Despite predictions of peaked rates, several factors could alter this trajectory:
Global Economic Surprises: Unexpected international economic developments could prompt continued rate increases.
Sluggish Domestic Growth: If New Zealand's economy remains robust and inflation persists outside target ranges, the Reserve Bank will likely continue raising the OCR.
What Should I Do If I'm Refixing My Mortgage Now?
No one can predict home loan costs with absolute certainty. Professional consultation with a mortgage adviser regarding individual circumstances is essential before committing to rates.
If you anticipate rate decreases within one to two years, shorter-term fixes (1-2 years) align with that outlook. Conversely, if you expect rates to remain elevated or rise further, longer-term locks (3-5 years) provide stability.
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