Yes as predicted by many senior economists, the Official Cash Rate has been reduced to 1.5 percent.
Citing uncertainty about the global economic outlook and slowing global economic growth since mid-2018, the Reserve Bank of NZ has dropped the OCR to 1.5%.
Within the next few months, you are likely to see the big 4 banks drop their mortgage interest rates. Some forecasts are that the one year fixed rate will drop to lower than 3.90% .
At the same time, if you happen to have savings in the bank, you will get an even lower interest rate for your term deposit. That just adds insult to injury when you factor in the rising petrol prices and other costs of living. In fact, for a nation where households do not have a track record of saving, lowering a term deposit interest rate just discourages people from saving.
But for borrowers, it looks like there may be another OCR rate cut in the next 6 months. If that’s the case, it may just pay to fix your mortgage for 6 months or one year and then refix again after the next rate decrease.