What is the OCR?
The OCR is the interest rate set by the Reserve Bank of New Zealand (RBNZ). It acts as the benchmark for interest rates across the country – influencing everything from your mortgage repayments to how much you earn on your savings.
It’s one of the main tools the Reserve Bank uses to keep our economy running smoothly, particularly by targeting inflation (keeping it between 1–3%) and supporting sustainable employment.
When the OCR Goes Up
- Borrowing becomes more expensive – so if you’ve got a mortgage, loan, or credit card debt, your repayments might increase.
- Saving becomes more rewarding – you might see better returns on your term deposits or savings accounts.
- It’s aimed at slowing down spending, which helps reduce inflation.
When the OCR Goes Down (like today!)
- Borrowing gets cheaper – this is great if you’re taking out a new loan or refixing your mortgage.
- Savings returns are lower – your bank may offer less interest on savings.
- Lower rates are designed to encourage spending and investment, which can help stimulate the economy.
So Why Was the OCR Dropped Today?
When the Reserve Bank drops the OCR, it’s often in response to signs that the economy needs a bit of a boost – maybe inflation is easing, or growth is slowing. By lowering rates, they’re trying to make borrowing more accessible and keep money moving through the economy.
How This Might Affect You
- Homeowners: If you’re on a floating mortgage rate, you could soon see lower repayments.
- First-home buyers: Lower interest rates might mean more affordable loan repayments.
- Savers: You may earn slightly less interest on savings accounts.
- Businesses: Lower borrowing costs could make it easier to invest or expand.
Thinking About Your Next Step?
If you’re looking to buy a property, or already own one and want to review your current mortgage, now is a great time to chat.
Contact Loans & Mortgages for guidance tailored to your situation — whether you’re purchasing, refinancing, or just want to make sure you’re getting the best deal.