The recent reduction of the Official Cash Rate has given home buyers and mortgage holders cause for optimism after the turbulent past three years of economic hardship.
Bruce Patten, a leading mortgage advisor and real estate commentator based in Highland Park, says the Reserve Bank’s decision to cut the OCR from 5.50 per cent to 5.25 per cent earlier this month was a “surprising move”.
“When the June quarter inflation figures came in at 3.3 per cent, outside the one-three per cent Reserve Bank band, they seemed destined to leave the cash rate on hold until later in the year.”
In the lead-up to the cut, Patten says many economists were divided in their opinions on whether the Reserve Bank would.
“This has paved the way for further drops at the next OCR on October 9 and the final announcement for 2024 in November,” says Patten, of Loan Market.
“The Reserve Bank Governor stated that as long as inflation remains low, then they will continue to ease further.”
Patten says people with mortgages should consider staying on short-term fixed rates of no more than a year.
“We expect the fixed rates to be around 5.0-5.50 per cent in six to 12 months and floating will settle at around 7 per cent.
“Ideally, you should only be considering a longer-term fixed rate option of two-five years when the rates are at their next low point.”
Patten believes the residential real estate environment “remains a buyers’ market”.
“No doubt we will be looking back in the years to come thinking 2024 was perhaps the missed opportunity for some who wished they had bought rather than waiting for the bottom, which we can often only spot in hindsight.”
Steve Maserow, Barfoot and Thompson branch manager in Howick, says the reduction in the OCR rate is “good news”.
“I believe we will only start noticing the effects of a lower interest rate (on condition it drops which is expected) in about 12 to 18 months.”
Lauren Mirabito, Bayleys branch manager for Howick and Beachlands, says “the market is certainly improving”.
“There is optimism all around with buyers, vendors and salespeople, as a result of the interest rate cuts.
“The OCR announcement will continue to have a positive effect and now we are all waiting in positive anticipation for the next one,” Mirabito says.
Ian Taylor, branch manager for Ray White Howick, says: “It will certainly provide a sign of intent from the Reserve Bank that we will start to see a downward movement in the OCR.
“This will provide more certainty and confidence for buyers and sellers. We expect 2025 to be a better year for everyone.”
