Our Mortgage Team has put together some information on where mortgage rates are heading in the near future. As the last few years have shown us, there’s never any certainty!
Over the past two years, interest rates in New Zealand have more than doubled. This has been partly from low interest rates, high government spending and a tight labour market. As a result, these factors have driven up inflation.
Inflation measures the rise of average prices of goods and services in an economy. In June 2022, it peaked at 7.3%. One of The Reserve Bank’s roles is to keep inflation between 1 – 3% so they put pressure on interest rates to bring inflation back down.
As mortgage advisers, we are frequently asked to make predictions on interest rates. Looking at the OCR and inflation gives us some indications on where to expect movement. The inflation rate is slowly starting to come down, currently 4.7% with predictions that it will be at 3-4% by the end of 2024 and into 2025.
As a result, interest rates are expected to remain stable through 2024 and begin to ease at the end of 2024 and during 2025. For this reason, we are currently recommending fixing for 12 or 18 months.
Below is a link from Canstar on what the big banks are predicting (Dec 2023):