OCR Announcement Updates
- lucindaterry5
- Feb 20
- 5 min read
Updated: Aug 19
What is the OCR and the OCR Announcement?
The Official Cash Rate is the interest rate the Reserve Bank of NZ sets for overnight loans between banks. It’s their tool to keep inflation in check. When the OCR goes up, borrowing gets more expensive, helping slow down inflation. When it drops, borrowing gets cheaper but so do the interest rates banks offer on savings accounts.
The RBNZ is about to decide where to set the August Official Cash Rate (OCR), and it could mean real changes to what you’re paying each month.
The banks aren’t waiting around. In the past week, we’ve seen them cutting fixed-term rates, especially in the shorter terms. And for borrowers, that can be exciting and slightly confusing. Do you lock in now? Wait until after the announcement? Go short? Go long?
Let’s break down what’s happening, what could happen next, and why talking to your adviser before making a move could be the smartest decision you make this year.
Why Everyone’s Watching the OCR
The OCR is the rate the RBNZ uses to influence borrowing costs across the economy. Right now, the OCR is sitting at 3.25%, down from a peak of 5.5% last year. Market pricing suggests the RBNZ will trim it by 0.25% to 3.00%, thanks to softer inflation, slower growth, and a cooling job market.
But the number itself isn’t the only thing to watch. The RBNZ’s tone and whether they hint at more cuts to come, will shape mortgage rates over the rest of the year.
Banks Are Already Making Moves
Even before the RBNZ has spoken, the major banks are battling it out for borrowers. Over the past week we’ve seen sharp drops in popular fixed terms:
6-month fixed: around 5.09%
1-year fixed: as low as 4.79%, the cheapest we’ve seen since mid-2022
18-month fixed: also down to about 4.79%
These are meaningful moves, especially for anyone coming off a higher fixed rate. Shorter terms have seen the biggest cuts, as banks position themselves ahead of any official OCR move.
What Happens After the 20th?
If the RBNZ cuts to 3.00%, we’re likely to see further easing in short-term fixed rates, particularly if the Bank signals more cuts ahead. If they take a more cautious stance, rates may not fall much further right away, but competition among lenders could still keep them trending lower.
For borrowers, this means timing and term length will matter more than ever.
It’s Not Just About the Cheapest Rate
While it’s tempting to grab the lowest rate on offer, that’s not always the smartest move for everyone. The “best” mortgage rate depends on:
Your time frame - Will you need to refix in 6 months? Could rates be lower or higher then?
Your stability needs - Do you value certainty over chasing every drop?
Potential costs - Break fees can eat up any savings if you need to break your loan early for any reason.
Extra perks - Sometimes a slightly higher rate with cash incentives or better flexibility is the better long-term deal.
Why Speaking to an Adviser Is Essential
Your mortgage is one of the biggest financial commitments you’ll make. An adviser can help you:
Weigh up the pros and cons of short vs long terms.
Match your mortgage to your personal plans and budget.
Access deals and structures you might not find on your own.
Avoid the trap of locking into something that doesn’t fit your needs just because it’s the “lowest” rate today.
How quickly can you pay your mortgage off by keeping your repayments the same when rolling onto lower interest rates?
With rates moving quickly and plenty of noise in the market, getting personalised advice can save you money, stress, and missed opportunities.
Bottom Line
The RBNZ’s 20 August decision will set the tone for the months ahead, but banks have already kicked off the rate war. That means there are good deals out there right now but the right choice for you might not be the cheapest headline rate.
Before you lock anything in, talk to your adviser. They can help you make a call that works not just for today’s rates, but for your life and goals in the months and years ahead.
Some helpful terms to understand when investing in property
Compounding Returns
Think of compounding returns like a snowball rolling down a hill - except instead of snow, it’s your wealth, and instead of getting stuck halfway, it just keeps getting bigger. For example, a $500,000 asset compounding at 6% per year will generate half the returns of a $1 million asset. Basically, the more you invest, the more your money works overtime. So, keep rolling that snowball, folks.
Leverage
Leverage is like using a cheat code in the game of property investment - borrow some money, buy an appreciating asset, and let it outpace the cost of interest. Smart investors are not scared of "good debt." It’s the kind of debt that helps you acquire assets that grow faster than the interest rates. And with rates dropping, this is pretty much the best time to grab that cheat code.
Professional Help
Good investors know they can’t do it all alone—so they recruit a team of financial wizards to guide them. Think of it like assembling the Avengers, but for your money. Professional advice helps you make the right moves, so you're not flying blind. Naked Finance can be that team for you. With financial adviser specialising in mortgages, investments, insurance and so much more, we can be your financial GPS, guiding you toward a prosperous future.
The Power of Property Investment
As you may have gathered from this blog, we are all about smart investment and property takes centre stage in many people's portfolio. It’s like the tortoise in the race, slow and steady, but it wins. Property tends to appreciate over time in New Zealand, giving you both passive income and capital growth. It's like planting a money tree—you just have to water it (and maybe prune it occasionally). Do you think you are optimising your property for maximum benefit? If you want to chat more about it, our property team is always here to help.
Financial Literacy
At Naked Finance, we believe financial literacy + action = financial success. Knowledge is power, folks, and understanding how money works is key. Savvy investors make it a point to learn about business, finance, and taxes—and they’re the ones who spot opportunities that others miss.
Playing the Long Game
Building wealth isn’t about hitting the jackpot tomorrow—it’s about sticking to the plan and letting time do the heavy lifting. The best investors focus on long-term gains, not the latest market buzz. They ride out short-term ups and downs and stay focused on their goals. It’s the financial equivalent of a marathon, not a sprint.
So, if you want to crush it in 2025 and beyond, start embracing these principles. Because when you combine patience, persistence, and a few smart moves, you’ll be on your way to securing that shiny financial future.
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