OCR Steady, For Now
The Reserve Bank (RBNZ) yesterday left the official cash (OCR) rate on hold at 2.5 per cent, in line with economists’ expectations.
In the RBNZ statement announcing the decision, Governor Alan Bollard indicated that the performance of the New Zealand economy remains in line with expectations, and that increases in the OCR will begin over the coming months as forecast earlier in 2010.
Many economists believe the first interest rate increase will occur in June, in conjunction with the quarterly monetary policy statement.
There are indications, however, that overall increases to the OCR this cycle will not be as aggressive as has been the case in recent years, with Bollard stating yesterday that the current differences between the OCR and lending rates, ”should reduce the extent to which the OCR will need to be increased relative to previous cycles”.
Current floating rates on mortgages start at around 5.7 per cent p.a., with two-year fixed rates sitting at around 7.2 per cent p.a.
Mortgage options will vary between borrowers so it’s important to have a thorough assessment of your specific situation.