
On 27 November, the Reserve Bank of New Zealand (RBNZ) dropped the Official Cash Rate (OCR) by 50 basis points, bringing it down from 4.75% to 4.25%. The significant drop is the second consecutive cut since the last reduction in October 2024. The drop slows inflation and encourages economic activity, which is good news for many nationwide.
What Does the OCR Drop Mean for Home Buyers
When the OCR drops, borrowing becomes more affordable. When the news of the drop was released, major banks, including Westpac, BNZ, and ANZ, reduced their floating mortgage rates.
Here’s a glimpse into those changes…
ANZ’s floating home loan rate will decrease to 7.39%, and its flexible home loan rate will drop to 7.5%.
ASB has lowered its variable home loan rate by 50bps to 7.39% and its orbit rate to 7.49%, along with cuts to business and rural lending rates. Its home loan service test rate also dropped to 7.6%
Westpac has reduced its fixed and floating interest rates, including a 20 basis point cut to its one-year fixed-term home loan rates, which now stand at 5.79% for special rates and 6.39% for standard rates. Additionally, the bank has lowered its six-month fixed rates by 26 basis points, with the special rate now at 6.19% and the standard rate at 6.79%. Westpac also decreased its service test rate for home loans to 7.6%.
Kiwibank has reduced its variable home loan and business lending rates by 50 basis points, bringing the variable and offset loan rates down to 7.25%. Additionally, the revolving loan rate has been lowered to 7.30%.
BNZ has reduced its standard variable home loan rate by 50 basis points, reflecting the recent OCR cut. This change comes shortly after the bank lowered its standard six-month fixed home loan rate by 50 basis points to 5.99% in November 2024.
The most significant change came from the smaller Co-operative Bank, which reduced its floating home loan rate by 70 basis points to 6.95%.
Reductions to the interest rates like those mentioned above make monthly mortgage repayments more affordable and boost borrowing capacity. When mortgage rates drop, the total amount of interest paid throughout the loan decreases, meaning home buyers have a shot at qualifying for larger loans. For those eager to get onto the property ladder or for buyers, properties that may have been out of reach from an affordability point of view become more attainable.
While the news is refreshing for home buyers, it’s essential to exercise caution. Lower interest rates are great and can make homeownership more accessible, but they can also affect the demand for new, fresh properties, thus hiking up property prices. Be mindful not to overextend yourself financially, considering that interest rates fluctuate.

What Does the OCR Drop Mean for Home Sellers
Those selling their properties can potentially see a far more active property market than what we’ve seen since 2024. Buyer interest increases when borrowing becomes more affordable so you can expect quicker sales and a bump in property values. Sellers should be pleased to hear that a dynamic market can give them greater confidence in their ability to meet their desired sales price.
The economic environment remains a critical factor, and regardless of the reduction in the OCR rates, economic growth is still slow, with forecasts indicating it will shrink even further. However, the RBNZ expects things to pick up during 2025 as the lowered interest rates begin to encourage investments and spending.
While promising for sellers, if you plan to place your house on the market, you should remain realistic about the pricing and current market conditions.
Future Outlook
With economic conditions continuing to evolve, another cut may occur early next year. The following announcement will be made on 19 February 2025.
Make the Most of the OCR Drop with Expert Guidance
Are you ready to make the most of Tauranga and the Bay of Plenty’s housing market with the OCR drop? Contact East Realty and let us help you through the home buying, selling, or renting of your property—reach out today and experience the difference!
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