
Earlier this month, the Reserve Bank of New Zealand (RBNZ) made headlines by lowering the Official Cash Rate (OCR) to 4.75%. It was the second reduction in four years, following a 25 basis point cut in August. This move, intended to stimulate economic growth, is expected to have a positive impact on the real estate sector across the country.
In this month’s blog post, we dive into how the drop in OCR may affect buyers and the housing market.
Understanding the OCR and Why It's Important
The Official Cash Rate is the interest rate at which the RBNZ lends to commercial banks. When the OCR decreases, banks respond by lowering their interest rates, which can lead to several benefits. These include:
Mortgage Relief: Lower interest rates make mortgage repayments more affordable. This means first-home buyers may find it easier to enter the market, leading to a potential increase in demand for homes.
Refinancing Opportunities: Homeowners with existing mortgages may take advantage of lower rates to refinance, reducing their monthly payments.
Investor Activity: Lower borrowing costs may entice investors back into the market, leading to heightened competition for properties, especially in desirable areas.
After a period of instability in the real estate market due to rising interest rates and economic uncertainties, the recent OCR cut has already resulted in banks lowering their interest rates and is anticipated to stabilise property values, boosting confidence among buyers and investors.
According to Property Economist Kelvin Davidson, 68% of new loans in August were set for terms of six months or less. This means many borrowers are on short term fixed or floating rates, which will likely lead to a prompt impact on borrowing costs throughout the economy and housing market.
Adding to this positive outlook, forecasters predict further rate reductions, with the last OCR announcement of the year scheduled for 27th November.

Now Is The Time To Act
At East Realty, we have already noticed increased activity and remain confident in the market’s recovery. While the real estate market has faced instability, we expect the cuts to the OCR to continue to stabilise property values. Now is the time to act and make the most of falling interest rates and the current market conditions. See our latest market update here.
Our team is here to offer expert advice and personalised support, helping you navigate the real estate market with confidence. Get in touch with us today!
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