Last Wednesday, the Reserve Bank held the Official Cash Rate at 2.25% — and on the surface, nothing changed. However, this time the committee was split. Half wanted to hike. The other half, including Governor Anna Breman, voted to hold. Breman cast the deciding vote, giving investors and homeowners a brief but valuable reprieve.
In Brennan’s own words: “On balance I thought it was appropriate to hold, but it is very likely that we’ll see interest rate hikes going forward.” That’s not a neutral statement - it’s a signal. The RBNZ is targeting a return to its 2% inflation midpoint by mid-2027, and the direction of travel is clear.
Our investment expert adviser breaks down what it means for you.
5 Key Takeaways from Properli Investment Adviser Ryan Orr
1. A Split Decision - But the Direction is the Same
The 3-3 committee split was very interesting. The main thing they seem to be debating is the composition of what is driving inflation, so the risk is that the evidence comes through and proves the hawks (those who wanted to hike sooner) correct - and that’s where we could all be surprised.
2. No Major Changes for Borrowers as yet
While expectations from the RBNZ have shifted, the major NZ Banks have already more than factored this into their mortgage rate pricing. So from here I don’t see material further uplift to mortgage rates (in the absence of any change to the Reserve Banks outlook), because it has already happened. I see value in the slightly longer terms still (2-3 year fixes), to provide certainty to both owners and investors around their outgoings at a time when uncertainty is heightened globally.
3. Any Further Price Drops in Property Prices Look like Opportunity To Me
Despite what the Banks and the media will have you believe, I don’t think property prices in NZ will fall materially from here; at worst, my view is they remain stable with some volatility depending on which part of the country you are in. My message to investors is that this is simply providing a little more time to take advantage of the opportunities currently presenting themselves out there. I don’t think interest rates are going anywhere near the levels we observed in 2023 this cycle, and once the world recalibrates the oil supply chain - prices will reduce and confidence will return. This to me would signal the beginning of the next upward movement in our property market cycle.
4. Unemployment and the Property Market
Other things I was looking at - their expectations for unemployment (affects confidence and our housing market) and their thoughts on the housing market specifically. They’re not as negative on either as they could have been - expecting flat prices this year, and house prices to start going up again from next year on. Unfortunately for our job seekers it might just take a little bit longer than we thought - but as long as people are largely keeping their jobs it means things won’t materially get worse.
5. Market Expectations
Foreign exchange tells me that the market was a little bit surprised, but the movements in our currency and interest rates were short lived and settled down shortly after the announcement. In short I didn’t actually think they were that hawkish in the RBNZ’s forecasts for the upcoming OCR changes, while they uplifted their rate track to include more hikes, we have an end point that is still 1% lower than what the market was pricing going into the meeting.
Conclusions from founder Kayne Wahlstrom
There are two groups we’re thinking about right now: investors looking for their next move, and homeowners or first-timers navigating mortgage decisions. Here’s our practical read on both.
The two stand-out markets for investors right now:
- Auckland - is potentially undervalued now and I think there’s great investment opportunities here for the long-term.
- Christchurch - the Selwyn District including areas like Rolleston - New Zealand's fastest-growing suburb.
On the mortgage side, banks have already factored in expected OCR movements, so rates have largely stabilised. Whether you're buying a family home or an investment property, we recommend running your numbers based on a 5% interest rate — broadly in line with the historical average. This gives you a picture of your average repayments (homeowners) or cash flow (investors) under a range of conditions.
Every situation is different – your equity position, your fixed term, your goals. The most important thing is to get personalised advice, so you understand the full picture before making any decisions.
Our team is here to help you explore your options if you’re considering your next property or mortgage move.
Book a free consultation to understand what this means for you.