The widely anticipated move is being welcomed by mortgage holders, prospective buyers, and industry leaders alike, as it reinforces stability across the real estate market.
Kelvin Davidson, Chief Property Economist for Cotality NZ, said that while the decision itself was expected, the real interest lay in the RBNZ’s forward guidance and forecasts.
“The overall conclusion from this has to be that further falls in the OCR lie ahead,” Mr Davidson said.
“The commentary outlined how the risks to both NZ’s economy and inflation from the global trade tensions are to the downside.”
Although inflation may tick up slightly in the coming quarters, spare capacity in the economy is expected to bring it back within target.
Meanwhile, the unemployment rate is thought to be peaking, with significant reductions likely to take time.
Mr Davidson also highlighted that the Committee’s decision wasn’t unanimous, with one member voting to hold the OCR at 3.5 per cent.
The published OCR forecast track points to a potential trough of 2.8 to 2.9 per cent by late 2025 or early 2026, indicating perhaps two more cuts, but not at every meeting.
For the housing sector, Mr Davidson suggested that little changes in the short term.
“Some banks were already trimming mortgage rates a little in advance of the decision, and although another renewed bout of competition is always possible, the largest rate falls may well be behind us.”
He noted the RBNZ’s projection of a 3.5 per cent increase in Cotality’s Home Value Index for 2025, followed by 4.8 per cent in 2026.
“We agree with that indication for a ‘subdued upturn’ in 2025,” he added, citing low economic momentum and ongoing debt-to-income restrictions as headwinds.
Echoing this sentiment, Ray White Chief Economist Nerida Conisbee described the cut as “welcome news” for borrowers and first-home buyers.
“This latest reduction comes as inflation increased slightly in the March quarter to 2.5 per cent, however, it is still comfortably within the RBNZ’s target band,” she said.
She also pointed to challenges ahead: “The central bank, however, faces a complex environment with the government simultaneously reducing spending from $2.4 billion to $1.3 billion as economic growth slows below previous forecasts.”
Ms Conisbee emphasised declining net migration, down from 113,700 to just 32,900, as a factor reducing population-driven housing demand.
Still, she sees upside for buyers: “With the national median house price holding steady at $790,000 and available listings up 10.9 per cent to 36,870 properties, lower borrowing costs should improve buyer activity, particularly supporting first-home purchasers,” she said.
