Borrowers need relief

It also believes an interest rate cut is also needed to help ease cost of living pressures.

“With interest rates being uncertain, borrowers are considering whether to fix their mortgage rate or continue with a variable loan, Peter White, FAMNZ managing director says.

“Many are electing to split their loan between the two as part fixed and part variable, and this can be a good option as the expectation is that rates will continue to trend downwards into 2026,” he says. 

There is no “one size fits all” when it comes to the best mortgage product, White says. 

“Mortgage and finance advisers will base their advice on the specific needs of each individual customer. This varies from person to person depending on their circumstances.” 

White says what is in the best interests of one customer is different from that of another. For example those who are self-employed may not fit traditional bank lending criteria, so it is important for advisers to discuss a client’s situation to obtain the loan that is most suitable.

“While the major banks have many good products, borrowers should never think they are the only source of lending.

“Often a non-bank lender can meet a customer’s needs for either a better rate or a more flexible loan depending on the requirement. Some of these lenders are only available through a mortgage adviser.”

A borrower can expect a mortgage adviser to provide advice based on both the lending product and on their situation, White says.

Shadow board has differing opinions

Meanwhile what should happen after tomorrow’s expected 0.25% OCR cut to 3% is vexing the NZIER shadow board.

The board’s view on tomorrow’s RBNZ review and Monetary Policy Statement ranged from a  0.50% to no change.

However, the majority recommended a 0.25%. This reflects the view the softness in activity and continued slack in the labour market should provide scope for a modest cut in the OCR now.

Regarding where the OCR should be in a year’s time, members’ picks reflected a wide range of views from no further easing to some further easing in monetary policy required beyond August.

One member highlighted signs of strong commodity prices and lower interest rates supporting activity and inflation approaching the top of the RBNZ’s 1-3% inflation target band in the near term.

These factors warrant a wait-and-see approach by the RBNZ to assess how the effects of strong export returns and lower interest rates on activity and inflation in the New Zealand economy will unfold.

Two members considered that further stimulus is needed beyond August to support the economy.