What To Know About Nz’s Mortgage Interest Rates In 2023

Within the past year, mortgage interest rates have skyrocketed, but is it possible for them to go down? We dive deeper into the projected NZ interest rates forecast in 2023, especially if you have an existing mortgage or plan to invest in a new property in New Zealand.

Why did mortgage interest rates increase?

Observing an increase in interest rates is overwhelming. Interest rates always move with the economic cycle. When the economy is slow, interest rates also go down accordingly to bring about economic growth. Since the COVID-19 pandemic struck, interest rates have followed this pattern. Since the NZ economy is trying to get back on its feet, economic activity is rising, and the prices of commodities also increase with these changes. In most cases, increasing interest rates are a response to rising inflation. The Reserve Bank of New Zealand aggressively hiked up interest rates as the country combats inflation.

Will mortgage interest rates continue to increase?

Many Kiwis who must pay their mortgage or buy a new property are concerned about the increasing interest rates. The Reserve Bank will likely continue raising interest rates until there are changes in the inflation predicament. While interest rates have been unstable in the past few years, expect interest rates to reach their peak in the first half of 2023.

What was the case of mortgage interest rates in the past?

In NZ interest rates forecasts, the flux of mortgage interest rates is constant. The great recession in 2008 saw mortgage interest rates reach 10%. After the pandemic, we saw interest rates at over 2% during early 2021. When the economy is heating up and bringing inflation, interest rates rise. On the other hand, interest rates go down when the economy is cooling down.

What is the OCR? How does it correlate with mortgage interest rates?

Upon checking various sources for NZ interest rates forecast, you might have encountered the term OCR. The Official Cash Rate (OCR) is the instrument The Reserve Bank uses to control all the interest rates in the country's economy. When the OCR rises, all kinds of interest rates follow suit. Like dominoes, mortgage interest rates also increase. The mortgage interest rates and OCR hike together to slow down the housing market.

What are the NZ interest rates forecast this year?

The Reserve Bank expects the current inflation rate of the economy to fall back late in 2023. Mortgage interest rates will likely rise in the first half of 2023. These rates will likely stay elevated for most of 2023, with mortgage interest rates starting to plunge again toward the end of 2023. Since the OCR influences all the wholesale and retail interest rates in NZ, all your financial statements with interest rates are affected. Mortgage interest rates are no exception. Looking at the NZ interest rates forecast in 2023 can help you make an informed decision when paying out your home loan or buying a new property in New Zealand. It's crucial to review the economy's state before investing in a property to ensure it doesn't backfire, eventually causing financial problems. You can reach professional real estate and finance experts to gain guidance on fluctuating interest rates.