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OCR Remains Unchanged for Now


Victoria Day – Harcourts Pukekohe

by Victoria Day, Harcourts Pukekohe


Whilst the official cash rate remains unchanged at least for now there are predications that the expected increase forecasted for the end of 2022 may have to be bought forward. This is a tricky balancing act for the RBNZ, in trying to pre-empt a rise in inflation without pushing up the exchange rate too much (and hence dampening exports).

This directly affects the housing market, with borrowers already seeing mortgage rates increase – and from a low base for rates, as well as larger debts, that could have quite a strong dampening effect on the market. Certainly, mortgaged investors’ share of property purchases has fallen in the past two to three months.

For those still trying to buy their first home, interest rate increases will raise the bar to entry.

Of course, a looming rise in the official cash rate will also directly affect the housing market, with borrowers already seeing mortgage rates increase – and from a low base for rates (as well as larger debts), that could have quite a strong effect. Then you’ve also got to add in the pre-existing effects of affordability pressures, 40% deposits for investors, the extended Brightline Test, and the tightening of interest deductibility rules (as well as the approval for the RBNZ to look at debt to income restrictions). Certainly, mortgaged investors’ share of property purchases has fallen in the past 2-3 months, albeit there are few signs that current landlords are looking to sell.

On the whole, events are beginning to reinforce the view that sales activity and price growth are close to (or at) a peak, and that both will ease for the rest of 2021 and into 2022. However, with unemployment low and in the absence of a GFC-style credit crunch, a full-on property downturn seems unlikely.

Want to know what this means for you? Give Victoria a call!


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elocal Digital Edition – August 2021 (#245)

elocal Digital Edition
August 2021 (#245)


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