Industry reacts to central bank's OCR cut
Mortgage advisers should prepare for a surge in refinancing enquiries following the Reserve Bank's aggressive 50-basis-point cut to the OCR, with industry leaders saying the move will boost both affordability and borrowing capacity.
Peter White (pictured left), managing director of FAMNZ, said the cut was welcome news for consumers but urged those who could afford it to maintain their current repayment levels.
"Consumers have been waiting for this, and every rate cut improves affordability for mortgage holders, which is a positive step," he said.
"However, I would urge those who can afford to keep up their current level of repayments to do so, as this will protect them and give them a buffer when rates rise again."
White said advisers had an opportunity to differentiate themselves from lenders by ensuring they provided the best advice and put customers' interests first.
"We can go the extra mile by encouraging customers to call their bank first to ensure they receive the full rate cut, but we should also be ready to assist them to look elsewhere if that doesn't happen," he said.
Jenny Campbell, country manager of Finsure NZ, said the 50-basis-point cut was sorely needed given the current state of the economy.
She noted that with inflation within the RBNZ's target range and unemployment at its highest level since 2020, the economy needed stimulus sooner rather than later.
"The 0.9% GDP contraction in the second quarter of 2025 has significantly increased concerns over economic slack and the pace of recovery," Campbell said.
"As lenders react to the drop, advisers need to capitalise on this opportunity to get their clients on a better deal, particularly with Christmas just around the corner.”
Small business relief
Adrienne Begbie (pictured right), managing director at Prospa NZ, said the cut gave small businesses much-needed breathing room.
"After consecutive cuts, the best snowballing outcome we can hope for is renewed consumer confidence and people feeling ready to get out there and spend again," Begbie said. "The more cash circulating, the better it will be for small businesses."
The cut would also ease pressure on business owners who use personal funds and home equity to support their operations, she said.
"That support can shift businesses into an investment and growth mindset as they plan for the months ahead, a hopeful sign for small business confidence across New Zealand."
Housing market effects unclear
Kelvin Davidson, chief property economist at CoreLogic NZ, said the immediate housing market effects were unlikely to be massive, given banks had already been cutting mortgage rates in advance.
He also noted that the economy needed significant work to turn around, but expressed optimism about the outlook.
"Although the effects of this will progressively flow through to borrowers in the coming weeks and months, the subdued labour market is the key restraint on the other side of the equation at present – and it will be slower to start improving; maybe not until next year," Davidson said.
"Today's decision will hopefully be the 'shock treatment' required to get everyone back into gear," he said. "The recent green shoots we've been seeing should emerge fully in 2026, and as unemployment starts to drop again, it seems likely we'll see house prices rise next year."
However, Davidson cautioned that debt-to-income ratio caps would likely restrain the size and speed of medium-term growth in property values.
White said the rate cut would increase borrowing capacity for prospective homebuyers, enabling more to step into the market, and reminded advisers they offered advantages beyond traditional lenders.
"Mortgage advisers not only focus on what is best for our customers, but we have access to a wide range of products not available through traditional lenders," he said.
