OCR hikes hit borrowers six months later

The RBNZ has released new data on the impact of its rate movements ahead of the October Monetary Policy Review meeting, when the OCR is expected to increase by 25 basis points.

According to the central bank, borrowers feel some of the impact within a month of a 1% OCR increase. The average two-year mortgage increases by 34 basis points within four weeks.

Surprisingly, the peak impact on mortgage rates comes six months after a change in the OCR, according to the RBNZ. By that point, 80 basis points' worth of additional costs are passed on.

"Individual borrowers with mortgages on longer fixed terms may take months or years to roll off, delaying the impact on their monthly repayments," Severin Bernhard, James Graham and Shaun Markham, authors of the RBNZ report, said.