Rates Update

Last updated: 21 Nov 2024

Rates have fallen substantially since their peak at the start of the year. The advertised 1 year fixed rate from the main banks was 7.3% in January, Kiwibank is now advertising 5.79% (and other banks will match it).

The Reserve Bank is expected to cut the OCR another 50 basis points (0.5%) at the end of the month, though this is largely priced into fixed rates so don’t expect immediate large cuts unless the Reserve Bank surprises and changes its forecasts substantially. Floating rates should drop around 0.4 – 0.5% to the low 7’s (or mid 6’s after discounting).

The downward trend in wholesale interest rates reversed slightly in October, and then more after the US election, so the period of rapid cuts may be over. The outlook is for rate cuts to be slower and more steady, though with a lot of uncertainty. No-one is quite sure what the new administration in the US will do, but the proposed tariffs and tax cuts could be inflationary and lead to rates staying higher for longer, which has flow on effects to NZ.

Banks are (mostly) competing for business right now and we might see more one-off specials like ANZ’s 5.59% for 1 year that they offered for a short time in October, matched briefly by BNZ and ASB. If you’re an Ahead Mortgages client we’ll be in touch if there’s an opportunity to refix. If you’d like to be a client please get in touch.