The Reserve Bank has cut the Official Cash Rate (OCR) by 0.50%, bringing it to 2.5%. The move itself isn’t surprising; what matters is the signal. The RBNZ has made it clear they’re willing to cut further if needed, but that flexibility will depend on how the economy behaves over the next few months.
In short, the economy still needs support — but the central bank is keeping its options open.
Previous guidance suggested the OCR might bottom out at 2.5%, so today’s move is a subtle escalation rather than a simple follow-through.
Timing of mortgage-rate changes
We’ve already seen some rate drops over the past few weeks, which had priced in a 0.25% cut.
Today’s 0.50% move came as a surprise to markets, so expect mortgage rates to settle gradually over the coming weeks as banks adjust their funding costs.
If your fixed term is expiring soon, consider floating temporarily until the new rates stabilise. For clients we’ve spoken to recently, we’ll continue monitoring lender changes and help time your next fix.
We’re still in a downward phase of the cycle, at least until the OCR is held steady, but the next few cuts, if any, are likely to be smaller and more spaced out. Mortgage rates should keep trending lower, just not at the same pace we’ve seen earlier in the year.
What it means for borrowers?
Short-term rates currently align best with where the market is heading; terms like six or twelve months are well-positioned if the easing trend continues.
We’ve been here before: back when there was a clear signal to cut further, only for inflation to reappear and flip the cycle. That’s the risk this time too: what looks certain now can change quickly.
When the OCR drops, the NZ dollar usually weakens. A softer currency makes imported goods more expensive, so the RBNZ is effectively betting that the domestic economy can absorb those price pressures for now. Whether that bet pays off will depend on data, and the RBNZ’s track record over the past decade reminds us that forecasts aren’t flawless.
Tools to Balance the Risk
If you value certainty, locking in a fixed rate can still make sense, just lock as late as possible to give time for the market to settle.
If you’re comfortable with some risk, shorter fixes or floating rates could capture further drops, especially with the next OCR reviews coming up on 26 November and 18 February.
Neither approach is inherently better — and you don’t have to pick just one.
There are a few ways to stay flexible without betting everything on one outcome:
- Rate averaging (splitting terms):
Divide your mortgage across short and medium terms — say six months, one year, and two years — so part of your loan catches any future dips while the rest stays stable. - Rolling or compound strategy:
Fix short for now, then roll into a longer term once rates flatten. Over time, this can produce a lower average rate than trying to guess the exact bottom.
These approaches don’t remove risk; they spread it intelligently.
The Bottom Line
The RBNZ has kept its easing bias alive, but we’re now in calmer territory.
Mortgage rates are still falling, just more slowly. The real challenge isn’t predicting the next cut; it’s managing your own rate strategy.
Don’t try to time perfection. Aim for balance.
Do you have loans coming up for renewal? Book a chat with one of our friendly Twine Advisers for guidance on the best way to structure your mortgage.
