Only a fraction of OCR cuts has fed into effective mortgage rates: RBNZ

Only a small amount of the two percentage point cut in the official cash rate (OCR) since August last year has fed into weighted average mortgage rates so far, according to the Reserve Bank.

The effective weighted average mortgage rate across all borrowers peaked at 6.4% last year and has only come down to 6.2% currently, said Chris McDonald, RBNZ’s manager of financial system monitoring and analysis at a media conference to discuss RBNZ’s latest financial stability report.

The report says RBNZ expects about 60% of mortgage lending to reprice to lower rates within the next six months and about 80% within a year.

The current rates offered by banks for one-year and two-year fixed terms are about 5%.