Mortgage Rates Nz

Mortgage Rates in New Zealand

Interest Rates Rise in New Zealand

Mortgage rates in New Zealand are on the rise, with the Reserve Bank of New Zealand (RBNZ) raising the Official Cash Rate (OCR) by 50 basis points to 2.00% in May 2022. This is the fourth consecutive increase in the OCR since October 2021, and the highest level since July 2015.

Reasons for the Increase

The RBNZ has raised interest rates to combat rising inflation, which is currently sitting at 6.9%, well above the RBNZ's target of 1-3%. Inflation has been driven by several factors, including the war in Ukraine, supply chain disruptions, and strong consumer demand.

Impact on Mortgage Holders

The increase in mortgage rates will have a significant impact on mortgage holders. Those with variable rate mortgages will see their monthly repayments increase, while those with fixed rate mortgages will be protected for the term of their fixed rate period. However, when their fixed rate period expires, they will also be faced with higher repayments.

Outlook for Mortgage Rates

The RBNZ has indicated that it expects to continue raising interest rates in the coming months. The Bank's Monetary Policy Committee (MPC) has projected that the OCR will reach 3.5% by the end of 2022, and 4.0% by the end of 2023.

Advice for Mortgage Holders

Mortgage holders should consider the following steps to manage the impact of rising interest rates:

• Review your budget and see where you can reduce expenses.
• Consider locking in a fixed rate mortgage if you are concerned about future interest rate increases.
• Refinance your mortgage to a lower interest rate if you are able to.
• Make extra repayments on your mortgage to reduce the principal and save on interest.

It is important to remember that interest rates can fluctuate, and there is no guarantee that they will continue to rise. However, by taking these steps, mortgage holders can help to mitigate the impact of rising interest rates.