On 14 August 2024 the Reserve Bank of NZ reduced the Official Cash Rate (OCR) for the first time in four
years down to 5.25%.
The NZ banks reacted immediately and reduced both their floating and fixed interest rates. This drop is the first of what is expected to be a number of further OCR cuts. Some economists are suggesting that the OCR might get down as low as sub 3% in the next one to two years with inflation continuing to ease.
This reduced OCR will help to ease the interest burden on both households and businesses and mean that much needed cash be available to flow back into the monetary system. This will hopefully drive much needed spending in the retail and hospitality sectors. The reduced inflation will also see much needed cash back in the pockets of consumers and businesses.
Reserve Bank data shows the share of new mortgage lending at terms of 18 months or shorter rose to 85% in February, a record high. This is great for Kiwi’s meaning that most will be able to participate in the reducing interest rates as the OCR falls further.
Rapson Loans and Finance are recommending for our clients to fix for shorter periods like 6 months, that way our clients can follow the market down and have further interest rate reductions.
ANZ’s NZ Business Outlook came out on Thursday 29 August and it saw business confidence soar to the highest level seen in a decade. This is great news for businesses and with expectations of additional employment and investment bodes well for the rest of 2024 and into 2025.
Heading into the last quarter of 2024 and into 2025, there are some really positive signs which should help businesses and consumers feel more confident about the future and that we have hopefully seen the worst and hardest times during this economic cycle.
If you wish to have a chat around interest rate strategy or get some financial advice, contact Tristan Hewett – 0211199458 who is an Owner/Financial Adviser at Rapson Loans and Finance.
