Home loan borrowers can expect rates to fall throughout the rest of this year and next, commentators say.
The Reserve Bank cut the official cash rate by 25bps to 5.25 percent on Wednesday.
While it was a move that was forecast by several economists, it was a u-turn from the bank’s position in May. Infometrics chief executive Brad Olsen described it as a “WTH moment” and “the biggest flip-flop ever”.
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Well, some good news for once. I’ve been fixing at 6 months the last few renewals, in the hope rates will start to drop.
We’ve also been on 6 month renewals, but only refixed last month so hopefully we see another drop before Christmas! Not holding me breath, though.
I know this is really good for those of you with mortgages. Bad for savers, so swings and roundabouts. I had hoped the economy would sustain a higher OCR for longer.
There was another article I can’t find anymore that said it sounds good - but the Reserve Bank cutting interest rates a full year ahead of expectations is a very concerning sign. Sure mortgages are going to get cheaper, but we’ll also see many more people lose their jobs than originally expected. Basically the RBNZ is saying they don’t need to reduce people’s ability to spend, because the economy is going to do it for them.
Yes, it coming sooner than expected was, as this article said, “WTH” and a sign of things to come not being all that great. Austerity is more or less proven to not work, it’s frustrating to see it being wheeled out again especially in the form of public sector job losses.
Even worse is the timing of the benefit reforms. (paraphrasing) RBNZ saying “so many people are gonna be unemployed because the number of jobs will shrink” and the government saying “these people would have jobs if they tried harder”.
Ah yes the nonsensical myth that the number of lazy people (so insanely lazy that they prefer to live below minimum wage) magically grows and shrinks in tandem with the economy and changes to the elasticity of the labour market …without being in any way related to it.
