Home Loan Rate Report: Mortgage rates could be as low as they’ll get

  • The Reserve Bank of New Zealand (RBNZ) cut the Official Cash Rate (OCR) to a record low 1.0% last August.  Since then it has maintained that developments do not warrant more policy stimulus despite risks to the outlook (including the coronavirus). 
  • Mortgage interest rates appear to have hit their lows in late 2019. From now on, we expect mortgage rates to gradually rise unless the RBNZ changes its view and cuts the OCR again.  The RBNZ seem less likely to lower the OCR any further (their eventual move could be a hike). Regulatory changes could also provide upward impetus.
  • Borrowers can lock in very low interest rates now, but should plan to deal with higher interest rate costs as fixed terms mature.  Our forecasts suggest fixing in the 1- to 2-year horizon and then rolling over on similar terms is likely to be the cheapest option over a 5-year time horizon.

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Chris Tennent-Brown

ASB Wealth Senior Economist

Chris has worked as an economist for ASB and Commonwealth Bank of Australia in Sydney since 2005. His work has involved monitoring and forecasting trends in the New Zealand economy, with a focus on drawing implications for financial markets and investments. Chris is passionate about savings issues, and much of his current work is focussed on broadening peoples understanding of investments. Chris obtained a Bachelor of Commerce at Auckland University, majoring in Economics, and prior to joining ASB worked in the funds management industry for Bankers Trust and BT Funds Management. With over 20 years' experience in finance, Chris has also spent several years farming, and was a New Zealand representative cyclist. When not at work, Chris likes to travel, cycle, and spend time with his family and numerous pets.

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