tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Saturday, June 15th, 8:37PM

Mortgages

rss
Latest Headlines

OCR to remain high in 2025

The OCR could still be above the Reserve Bank’s 1-3% band in the second half of 2025.

Thursday, August 3rd 2023, 6:13AM

by Sally Lindsay

Infometrics expects it to be hovering at about the 4% range. “Relief for mortgage holders will not be massive,” says Gareth Kiernan, Infometrics chief forecaster.

He says the peak in mortgage rates and surge in net migration have raised talk that house prices are close to bottoming out.

“Although inflationary pressures are moderating throughout the economy after two years of costs and prices running out of control, the Reserve Bank will be content to let the effects of its previous interest rate rises continue to dampen demand over the next 12 months,” Kiernan says.

“Faster population growth is likely to put a floor under house prices, but we still see housing affordability and high mortgage rates being a key constraint on the amount buyers can pay for properties throughout the next two years.”

In addition, Kiernan says the pick-up in population growth coincides with rapid expansion of housing stock, as record high dwelling consent numbers in the past two years translate into newly completed homes. As a result, Infometrics sees house price growth averaging just 2.2% a year between 2024 and 2028.

Masking the extent of the economy’s weakness over the next 12 months will be strong population growth, Kiernan says.

The labour market remains tight and wage inflation is still elevated, but the influx of foreign workers over the past nine months is rapidly alleviating the most critical labour shortages previously caused by the border closures.

Kiernan says in terms of employment, businesses have been in catch-up mode in the first half of this year, filling roles that had been vacant for an extended period.

However, Infometrics expects this pent-up demand for additional workers to peter out in coming months, job growth to slip below population growth, and wage inflation to moderate.

Annual net migration is set to peak at a record high of more than 93,000 in the second half of this year, but ease to a more sustainable level of below 40,000pa by the end of next year as the unemployment rate pushes up to about 5%.

“With fewer job ads indicating weaker hiring intentions, our central view is for a “fast up, fast down” track for migration, but the current momentum in visa and arrival numbers poses a risk that migration heads higher and stays there for longer than we are forecasting,” Kiernan says.

Against this backdrop, he says further OCR increases appear unlikely, particularly given that average debt-servicing costs will continue to rise well into next year as existing fixed mortgages come up for renewal.

Infometrics expects the economy to flirt with negative growth between now and the end of 2024 which, at first glance, is a mild downturn compared with the Global Financial Crisis.

“However, a 2.2% decline in per-capita GDP in the year to June 2024 represents a much more significant contraction. This result demonstrates the reversal of households’ fortunes as the economy has slowed,” he says.

“The effects on businesses of each of their customers spending less will only be mitigated by an increase in customer numbers associated with strong net migration.”

Kiernan says be it a continued slowdown, a double-dip recession, or any other description, the economy is still going to look and feel weaker throughout the rest of this year and into the next.

“That’s the price we’re paying to get inflation under control and put the New Zealand economy on a more sustainable path.” At least he says, the country is now seeing the effects of the tightening in monetary conditions coming through.

Tags: OCR forecasts

« Mortgage borrowing hits a highWage rises squeezed »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News
Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.74 7.35 6.99
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.65 7.25 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 ▼7.09 ▲6.95
SBS Bank Special - 7.14 ▼6.49 ▲6.35
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.84 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.24 6.75 6.39
Median 8.64 7.19 7.17 6.65

Last updated: 12 June 2024 4:04pm

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
 
Site by Web Developer and eyelovedesign.com