Key Facts

  • Most economists predict an interest rate cut in late 2024 despite the Reserve Bank’s stance.
  • The Reserve Bank of New Zealand might adjust the cash rate from as early as August 2024.
  • The latest prediction indicates rates reducing by late 2024, but caution is advised due to inflationary pressure.
  • BNZ chief economist Mike Jones suggests August 2024 as a possible turning point with mortgage interest rates poised to start decreasing in the last quarter of 2024.
  • Other major economists echo Jones’ predictions regarding longer-term mortgage interest rate cuts in late 2024. However, Westpac expects further hikes to the OCR in 2024.
  • About 20% of mortgage holders are at or below 3% interest rates, with some having fixed for up to five years in 2021 thus far avoiding interest rate rises.
  • ASB’s chief economist Nick Tuffley predicts mortgage interest rate cuts by late 2024 with OCR cuts likely in February 2025.

Article Summary

Economists are forecasting a decrease in interest rates towards the end of 2024 despite the Reserve Bank of New Zealand’s current reticence. Chief economists from BNZ, Westpac, Kiwibank, ANZ, and ASB support the prediction of lowered mortgage interest rates by late next year, though Westpac also anticipates further OCR hikes in 2024 in line with the Reserve Bank’s projections.

BNZ’s Mike Jones sees August 2024 as a potential turning point for OCR, with mortgage interest rates expected to begin a downward trend in the last quarter of that year. He cites inflationary trends as supportive of this assumption. In contrast, Westpac’s Chief Economist Kelly Eckhold conservatively suggests no OCR cuts until 2025.

According to ASB’s chief economist Nick Tuffley, by the end of 2024, a decrease in mortgage interest rates could be witnessed, and a cut in the OCR is anticipated by February 2025. He mentioned a segment of mortgage holders, around 20%, who have locked their rates at or below 3% for up to five years in 2021, thereby mitigating the impact of recent interest rate increases.

ANZ economist Andre Castaing has a conservative outlook similar to Eckhold, expecting no OCR cuts until 2025, although he also predicts a fall in mortgage rates by the end of 2024. Inflation and house price moderation continue to drive the Reserve Bank’s strategies.

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