Mortgage Rate Cuts Provide Relief for Kiwi homeowners, Further declines Expected
Auckland, New zealand – falling interest rates are easing financial pressure on New Zealand homeowners, with more relief anticipated as loans are renewed, according too recent data and industry analysis. The Official Cash Rate (OCR) has dropped 300 basis points since August of last year, falling from 5.25% to 2.5%, putting more disposable income back into the pockets of New Zealanders.
The New Zealand Banking Association (NZBA) reports that approximately 40% of home loan customers are currently paying more than their minimum repayments, indicating a proactive approach to debt reduction. ”That’s especially true for borrowers on floating rates, and will assist those on fixed rates as those loans come up for renewal,” said NZBA Chief Executive Roger Beaumont.
Recent figures show 25% of the 60,249 new home loans opened in the last six months were issued to frist-time buyers. Beaumont noted, “It’s great to see first home buyers taking advantage of the current property market and getting into their first home,” adding that declining house prices - notably from post-COVID peaks – and decreasing borrowing costs are contributing factors.
However, the window of chance for first-home buyers may be closing. Nathan Miglani, managing adviser at Squirrel, predicts increased competition from property investors as interest rates continue to fall. “For first-home buyers, this is now the golden time for them to get serious and try to be in the market as people will be surprised how quickly the market will shift next year,” Miglani stated. He pointed to the shift in fixed-rate mortgages, noting a drop from 6.79% last year to 4.49% currently, with potential for rates to fall below 4%, triggering renewed investor activity.
