It’s the news everyone has been waiting for.
The Reserve Bank has cut the OCR for the first time in 4 years (from 5.5 to 5.25%).
But what does it mean for your mortgage? Where will interest rates go? And what does it mean for house prices?
What’s the impact on my mortgage?
Some banks have already cut their rates after yesterday’s news.
Kiwibank cut its floating rate. So did ANZ.
But ASB made the biggest moves.
They reduced all their fixed and floating rates.
At the start of the year, ASB’s 1-year rate was sitting at 7.39%.
They’ve now cut it to 6.59%. That is the 5th
time they’ve cut the 1-year since the start of the year.
An 0.8% reduction in just the last six months.
That could save an investor $4,400 per year (or $84 per week). That’s based on an entry-level investment property with a $550k mortgage and an interest-only mortgage.
If we see another 0.8% cut over the next six months (which isn’t out of the question), the 1-year rate would dip below 6%.
I expect other banks to follow ASB’s lead over the next few days.
Where will the OCR go next?
The Reserve Bank plans to cut the OCR further. This is a big change from their tough-talking stance only 3 months ago.