Game on for OCR and interest rate reductions
Now the OCR is moving back down again it seems it’s in an awful hurry to get to where its going with expectation the November announcement could be down by 50 basis points ( 0.5% ) with call for it to go as far as a 0.75% reduction being the last for the year. Then in the next announcement in Feb 25 that it will continue its speedy downward journey before it slows and be as low as 3.25% by July 25 according to a NZ Herald article citing Rabobanks comments as per the following link -
Rabobank expects an OCR of 3.25% in July next year – with forecast ‘risks’ - NZ Herald . This is an interesting article and well worth a read.
Complete conjecture of course and for me it’s a bit optimistic then who am I to comment when it’s the likes of Rabobank making the statements.
One of the reasons cited is there are a whole lot of mortgages that have been recently refixed short term, expecting rates to fall and due within 9 months so the Reserve Bank wants to see them being refixed again on a much better rate so sooner is better when it comes to getting on with the job and bringing rates back down again as there’s no longer reason to hold it at restrictive levels … this is great news for the economy going forward. I know lead times with bank lending teams have stretched out due to an overwhelming number of short term mortgage refixes falling due now which is set to continue for a while yet.
Talking with some local RE agents and they stated since the OCR announcements and recent interest rate reductions that the markets actually gone quiet, citing people are waiting for further rate cuts before they move, then later that morning I met with some bank representatives who stated “you know when you get a speeding ticket, you drive slower for a while after, well it’s the same when you’ve been through a tough economic patch, you play it cautious for a while so while rates are dropping, it’s too soon for confidence to build in the market just yet” … which I thought was a pretty good way to put it and probably explains succinctly where we’re at right now.
Next phase … CONFIDENCE! So once things get back to some semblance of normal in the upcoming months and we get things like US elections and Christmas out of the way and we’re once again back in sunny and happy days and finally head back to work and settle into next year … we’re THEN likely to see some settling in of a new phase of confidence for the year ahead and some positive expectation … save for any major upsets coming out of the blue.
We’ll see what the next OCR announcement brings us at 2pm Wednesday 27th November being the final announcement for the year, then we’ll know where we’re at for real.
And a huge congratulations to Team NZ on an epic Americas Cup win … what a great effort and so well deserved … yet another thing to be positive about.
