The RBNZ held the OCR at 3.25% and indicated it will probably cut again next month if the data flow and other developments over the next six weeks meet expectations.
Most banks have already pencilled in a further 0.25% cut next month and maybe a further one at the end of the year. In its outlook the ANZ has even dropped in a third cut for February next year.
The OCR has declined from 5.5% in August last year to 3.25% but some borrowers and economists feel the RBNZ could do more.
Borrowers, especially investors, are hanging out for lower mortgage rates.
In the RBNZ’s latest lending fully secured by residential mortgage dataset which shows when mortgages were uplifted, 37.3% of the $2.5 billion investors took out in May was on floating terms.
In comparison, 33.4% of the $6.4 billion taken out in mortgages by owner occupiers was for one-year fixed rates, with 31.6% on floating.
While owner-occupiers favoured two-year interest terms in April, they had a change of mind in May and their lending on these rates dropped to 18.8% from 29.3%.
New residential lending totalled $9 billion in May up $1 billion from April and up from $7.1 billion in the same month last year. It was the highest monthly total since July 2021.
More than 66% of lending was on fixed interest rates, down 4.1% from April, and 33.7% was on floating terms.
Meanwhile the Finance and Mortgage Advisers Association of New Zealand (FAMNZ) says irrespective of the OCR being put on hold homeowners looking to buy or refinance should consult a mortgage adviser to discuss their individual circumstances.
“While the interest rate is important, it is not the only factor to consider, Leigh Hodgetts, FAMNZ country manager says.
The mortgage market is in a transitional phase, with rates easing and house values rebounding slowly. “Advisers are receiving many questions around the loan structure, particularly fixed versus variable or a split home loan.”
Banks are unable to do this as they are in the business of selling their own products.
And specialist non-banks can also come into consideration for borrowers who need flexibility, particularly those with unique borrowing circumstances or who are self-employed, she says.
Her message to mortgage advisers is to use these times as an opportunity to proactively contact customers, update them on the rate movements, and discuss their needs and possible solutions.
“Don’t wait for them to contact you, as this level of service is what builds trust and separates us from lenders. It is also what distinguishes the most successful advisers from the others.”
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