Todays OCR rate cut of 1.5% from 6.5% to 5% is a bold move by the Reserve Bank of New Zealand and is one that is hope to put some stimulation into our very slow economy. The OCR drop will mean to us as consumers a whole host of things that will save us all some money in the long run. 
The main one will involve bank interest charges. Credit card interest rates will drop. Westpac has been the first and has dropped their interest charges, Kiwibank also has lower than the given normal credit interest rate. This will be great coming into Christmas and may ease a bit of pressure of families.
The big one that will help hundreds of thousands of New Zealanders will now enter into a market with lower interest rates as all New Zealand’s banks have been told to pass on the benefits of today’s record 1.5 percentage point cut in official interest rates.
Unfortunately this doesn’t go far enough in my opinion. There are still thousands of people fixed mortgages on interest rates around the 8% mark and higher and the sad thing is the breakage fees for these people is in some cases more than the savings that they may make with the lower interest rates.
But for all new mortgages and people coming up for renewal this is the rates you should expect:
ASB has cut its variable rate from 8.7 per cent to 7.95 per cent, while SBS has cut from
9.15 per cent to 7.2 per cent.
Kiwibank cut its floating rate from 7.95 per cent to 7.45 per cent, its six month rate from 7.49 to 6.99 per cent, its one year fixed term 6.99 per cent to 6.49 and its 2 year rate from 7.59 to 7.19.
Westpac has left its floating rate unchanged, but has today moved to cut its fixed terms. Its six month term has fallen 0.25 per cent to 7.1 per cent, while its one year rates have fallen by 0.5 per cent to 6.8 per cent
BNZ has cut its six month mortgage rates by 0.5 per cent, moving from 6.99 per cent to 6.49 per cent. Rates on its ‘totalmoney’ product are coming down from 8.29 per cent to 7.75 per cent.
Also what we are seeing is the New Zealand Dollar Dropping as well. With the Reserve Bank of New Zealand cutting the OCR the New Zealand dollar against most of its trading partners is weakened keeping our dollar low. But when other countries drop their OCR their currency is also weakened.
The New Zealand dollar has fallen from above US82c this year to US53c this week. This has increased returns
to exporters. But on the flip side many exporters are experiencing slower demand in export markets as a result of the global financial crisis so the exporters needed today’s big cut to keep downward pressure on the New Zealand dollar so that this part of the economy doesn’t stall.
At the end of the day the interest rate cut announced today was one that was predicted by most because the economy has clearly been slow and this rates cut will do wonders to stimulate activity in our economy. This should be good news to home owners and people wishing to buy a new home.
It is now becoming much more affordable to buy a home now. Interest rates have come down from where they were, house prices have dropped in almost all areas of New Zealand. These two factors are making the market real again. House prices and new mortgages are now at realistic levels and if you are thinking about buying some real estate I think that you now need to have a serious look at the market and consider what your next move will be. Are you going to wait or move…..