A recent cut in New Zealand's Official Cash Rate (OCR) has sparked both optimism and uncertainty. While mortgage rates have started to decrease, making homes more affordable for first-time buyers, challenges remain in the market.
Reports indicate further rate cuts as banks continue adjusting offers. With the OCR held at 5.5%, experts predict a 0.5% reduction in both November 2024 and February 2025. This has led banks like BNZ and Westpac to lower their fixed home loan rates. While the lower rates provide relief, they could also drive up house prices, potentially rising by 10% for every 1% drop in interest rates, making timing crucial for buyers.
Mortgage interest rates in New Zealand are expected to decrease by another 1.25 points by the end of 2025, which could lower mortgage rates from 5.5% to around 4%. While this may lead to a short-term boost in the housing market as lower rates tend to lift household sentiment quickly, a robust recovery is unlikely.
The above information is summarised from published articles, and should not be taken as financial advice. Investors should always engage licensed financial advisors for advisors.
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