--- title: OCR drops to 3.75% – Time to Refinance and Invest in Property? description: Understand how to get the most from mortgage repayment savings, when you refinance to a new rate. Compounding Interest Savings or Invest in Property? image: https://blog.properli.co.nz/hubfs/EDM%20Header%20Images%20(13).png --- ![OCR drops to 3.75% – Time to Refinance and Invest in Property?](https://blog.properli.co.nz/hubfs/EDM%20Header%20Images%20(13).png) # OCR drops to 3.75% – Time to Refinance and Invest in Property? - Home - [Finance](https://blog.properli.co.nz/finance) - OCR drops to 3.75% – Time to Refinance and Invest in Property? [ Admin ](https://blog.properli.co.nz/finance/author/admin) 05/12/2025 [ Finance](https://blog.properli.co.nz/finance/tag/finance), [ interest rate](https://blog.properli.co.nz/finance/tag/interest-rate), [ OCR](https://blog.properli.co.nz/finance/tag/ocr), [ Investing in Property](https://blog.properli.co.nz/finance/tag/investing-in-property), [ refinance](https://blog.properli.co.nz/finance/tag/refinance), [ Compounding Interest](https://blog.properli.co.nz/finance/tag/compounding-interest), [ Invest in property](https://blog.properli.co.nz/finance/tag/invest-in-property), [ Property](https://blog.properli.co.nz/finance/tag/property), [ reduce interest](https://blog.properli.co.nz/finance/tag/reduce-interest), [ reduce loan term](https://blog.properli.co.nz/finance/tag/reduce-loan-term), [ OCR drop](https://blog.properli.co.nz/finance/tag/ocr-drop) [0 Comments ](https://blog.properli.co.nz/finance/ocr-drops-to-3-75-time-to-refinance-and-invest-in-property#postComment) 2 Minutes ![OCR drops to 3.75% – Time to Refinance and Invest in Property?](https://blog.properli.co.nz/hubfs/EDM%20Header%20Images%20(13).png "OCR drops to 3.75% – Time to Refinance and Invest in Property?") This week, the RBNZ bank dropped the OCR by 50 basis points to **3.75%.** If passed on by the banks, a **50 basis point (0.50%) drop** in mortgage rates would reduce the interest paid on a mortgage, lowering the monthly repayments. By refinancing, you could reduce your monthly payments by locking in a new low rate or adjust your term – either with your current bank or a new one by switching lenders. Did you know, if you’ve got a $750,000 mortgage on a 30 year term, currently on an interest rate of around 6.5%, and you refinanced to a new low rate of 4.99%, **you could save around $714.35 per month, that’s a $164 per week!** ***What could you do with a saving like this?  *** - *Save it in a standard savings account gathering compounding interest?* - *Use the saving to support the cost of living and household expenses?* - *Keep your mortgage repayments the same and reduce your term (saving you in overall interest paid)?* - *If you have sufficient equity and enough for a deposit, would you put this saving towards an investment property?* If you kept your repayments the same for a $750,000 mortgage at 6.5% interest rate but reduced the mortgage term from 30 years to 20 years you could save $279,173 on interest repayments over the complete loan term ($808,983 on 30y vs. $529,810 on 20y). ***But property is where the significant gain can be. *** Let’s compare the capital growth variance between saving vs. investing over a 10 year period: 1. **Put $164 a week into a savings account with 3.5% compounding interest** 2. **Use $164 a week ****to top up an investment property ** **Scenario 1: Saving $164 per week with Compound Interest** **Assumptions:** - Weekly deposit: **$164** - Interest rate: **3.5% per annum** - Time: **10 years ** The estimated amount in the savings account after 10 years would be **$101,933** with a total interest gain of **$16,653**. **Scenario 2: Using $164 per week to Invest in a Property** **Assumptions:** - You use the **$164 per week towards a property** - The property appreciates at **5% per annum**. - Your loan interest rate is **5% per annum** - Your property value starts at **$750,000**. - You have **100% leverage** (loan-to-value ratio). The estimated property value growth over a 10 year period is approximately **$471,671 capital gain.** The graph below shows the growth over a 10 year period comparing compounding interest on a savings account (using an average of 3.5% interest rate) vs. capital growth on an investment property.  The difference is eye watering! ![Capital Gain on Property Investment vs. Compounding Interest on a savings account.](https://blog.properli.co.nz/hs-fs/hubfs/Imported_Blog_Media/1.png?width=700&height=343&name=1.png)   **Key takeaways:** ✅ **Property benefits from leverage**—your investment grows based on the entire property’s value, not just your extra payments. ✅ You can save on total interest paid on your mortgage if you maintain your monthly payments but **reduce your loan term. **✅ A **savings account is less risky,** but returns are much lower over time.*** *** ***The OCR drop could benefit home buyers in several ways:*** - **Increased borrowing power:** Buyers may qualify for larger loans as repayments will be lower on lower rates.  - **Higher demand for housing:** More affordability can drive up property prices, depending on supply. We’re already seeing the property market heat up this year.  - **Relief for existing borrowers:** Homeowners with floating rates or upcoming fixed-rate expiries will benefit if they refinance their mortgage with expert advice. ***Time to speak to an Adviser about refinancing your loan? Take action towards your financial future.*** ***Give us a call on (09) 361 0050 for a FREE consultation, or book time with an Adviser below. *** [ Book An Adviser ](https://calendly.com/properli-booking/financial-adviser-consult?month=2025-02)   --- #### Tag: [ Finance](https://blog.properli.co.nz/finance/tag/finance) [ interest rate](https://blog.properli.co.nz/finance/tag/interest-rate) [ OCR](https://blog.properli.co.nz/finance/tag/ocr) [ Investing in Property](https://blog.properli.co.nz/finance/tag/investing-in-property) [ refinance](https://blog.properli.co.nz/finance/tag/refinance) [ Compounding Interest](https://blog.properli.co.nz/finance/tag/compounding-interest) [ Invest in property](https://blog.properli.co.nz/finance/tag/invest-in-property) [ Property](https://blog.properli.co.nz/finance/tag/property) [ reduce interest](https://blog.properli.co.nz/finance/tag/reduce-interest) [ reduce loan term](https://blog.properli.co.nz/finance/tag/reduce-loan-term) [ OCR drop](https://blog.properli.co.nz/finance/tag/ocr-drop) #### Share: - [Follow us on Facebook ](http://www.facebook.com/share.php?u=https://blog.properli.co.nz/finance/ocr-drops-to-3-75-time-to-refinance-and-invest-in-property) - [Follow us on Twitter ](https://twitter.com/intent/tweet?url=https://blog.properli.co.nz/finance/ocr-drops-to-3-75-time-to-refinance-and-invest-in-property&text=OCR%20drops%20to%203.75%%20–%20Time%20to%20Refinance%20and%20Invest%20in%20Property?) - [Follow us on Linkedin ](http://www.linkedin.com/shareArticle?mini=true&url=https://blog.properli.co.nz/finance/ocr-drops-to-3-75-time-to-refinance-and-invest-in-property) - [Follow us on Pinterest ](http://pinterest.com/pin/create/button/?url=https://blog.properli.co.nz/finance/ocr-drops-to-3-75-time-to-refinance-and-invest-in-property&text=OCR%20drops%20to%203.75%%20–%20Time%20to%20Refinance%20and%20Invest%20in%20Property?description=This%20week,%20the%20RBNZ%20bank%20dropped%20the%20OCR%20by%2050%20basis%20points%20to%203.75%.%20If%20passed%20on%20by%20the%20banks,%20a%2050%20basis%20point%20(0.50%)%20drop%20in%20mortgage%20rates%20would%20reduce[...]&media=https://46739002.fs1.hubspotusercontent-na1.net/hubfs/46739002/EDM%20Header%20Images%20%2813%29.png) [ #### Refinance Mortgage to Consolidating Your Debt ##### Previous Post ](https://blog.properli.co.nz/finance/refinance-mortgage-to-consolidating-your-debt) [#### Refinancing Your Home Loan Could Save You Thousands ##### Next Post ](https://blog.properli.co.nz/finance/refinancing-your-home-loan-could-save-you-thousands) ## Related Posts [ kiwiSaver](https://blog.properli.co.nz/finance/tag/kiwisaver), [ fixed mortgage interest rate](https://blog.properli.co.nz/finance/tag/fixed-mortgage-interest-rate), [ Official Cash rate](https://blog.properli.co.nz/finance/tag/official-cash-rate), [ OCR drop](https://blog.properli.co.nz/finance/tag/ocr-drop), [ investment strategy](https://blog.properli.co.nz/finance/tag/investment-strategy), [ OCR reductions](https://blog.properli.co.nz/finance/tag/ocr-reductions), [ Lowering interest rates](https://blog.properli.co.nz/finance/tag/lowering-interest-rates), [ OCR Annoucements](https://blog.properli.co.nz/finance/tag/ocr-annoucements), [ RBNZ](https://blog.properli.co.nz/finance/tag/rbnz), [ Properli Real Estate](https://blog.properli.co.nz/finance/tag/properli-real-estate), [ Properli](https://blog.properli.co.nz/finance/tag/properli) [ Admin ](https://blog.properli.co.nz/finance/author/admin) 24 November, 2025 #### [How the OCR affects your Mortgage Repayments](https://blog.properli.co.nz/finance/how-the-ocr-affects-your-mortgage-repayments) At Properli, we know that understanding how interest rates affect your mortgage is key to staying... [Read More](https://blog.properli.co.nz/finance/how-the-ocr-affects-your-mortgage-repayments) [ Official Cash rate](https://blog.properli.co.nz/finance/tag/official-cash-rate), [ OCR drop](https://blog.properli.co.nz/finance/tag/ocr-drop), [ OCR reductions](https://blog.properli.co.nz/finance/tag/ocr-reductions), [ OCR Annoucements](https://blog.properli.co.nz/finance/tag/ocr-annoucements), [ RBNZ](https://blog.properli.co.nz/finance/tag/rbnz) [ Admin ](https://blog.properli.co.nz/finance/author/admin) 08 October, 2025 #### [RBNZ Surprises with 50 basis point OCR Cut to 2.50%. A bold step to loosen conditions!](https://blog.properli.co.nz/finance/rbnz-surprises-with-50-basis-point-ocr-cut.-a-bold-step-to-loosen-conditions) In a bigger than expected move, the RBNZ has slashed the OCR today by 50 basis points, bringing it... [Read More](https://blog.properli.co.nz/finance/rbnz-surprises-with-50-basis-point-ocr-cut.-a-bold-step-to-loosen-conditions) ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Admin", "url" : "https://blog.properli.co.nz/finance/author/admin" }, "dateModified" : "2025-05-11T23:48:49.677Z", "datePublished" : "2025-05-11T23:48:49.000Z", "headline" : "OCR drops to 3.75% – Time to Refinance and Invest in Property?", "image" : [ "https://blog.properli.co.nz/hubfs/EDM%20Header%20Images%20(13).png" ], "mainEntityOfPage" : { "@id" : "https://blog.properli.co.nz/finance/ocr-drops-to-3-75-time-to-refinance-and-invest-in-property", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://blog.properli.co.nz/hubfs/images/logos/properli-logo.png" }, "name" : "Triple M Group Ltd t/a Properli" } } ```