Over Half of March Mortgages in NZ Opt For Short-Term Rates Anticipating Future Cuts

Date Published: 8 May 2024

Key Facts

• In March 2024, over half of the new fixed rate term mortgage money was for terms of one year or shorter.
• Though RBNZ doesn’t anticipate cutting the Official Cash Rate till May of the following year, the markets suggest an earlier cut potentially in October of the same year.
• Owner occupiers took out $4.28 billion worth of new mortgages in March, a rise from $3.483 billion in February. 42.01% of this amount was fixed for a year.
• There is a decrease in lending on two-year and three-year terms and an increase in 18-month fixed terms.
• New residential investor mortgage lending rose to $1.3 billion in March, with one-year fixed terms being the most popular.

Article Summary

The latest data from the Reserve Bank of New Zealand (RBNZ) shows that the majority of new fixed-rate term mortgages in March 2024 were for periods of a year or less. This suggests that many borrowers are anticipating potential rate cuts in the near future, despite the RBNZ’s indications that it won’t decrease the Official Cash Rate until May of next year. Nevertheless, the financial market anticipates the first rate cut could occur as soon as October this year.

Interestingly, the data shows a significant increase in new mortgages taken out by owner occupiers, reaching $4.28 billion in March, up from $3.483 billion in February. More than 42% of these loans were fixed for a one-year term, indicating a swift and growing trend seen since the beginning of the year.

The RBNZ data also suggests a faltering interest in longer term loans, with both two and three-year terms reaching historical low levels of popularity. Meanwhile, new residential investor mortgage lending rose to $1.3 billion in March, with the one-year fixed terms being the most preferred choice.

In conclusion, the trend of increasing short-term fixed-rate mortgages suggests that many borrowers expect a rate cut and are positioning themselves to take advantage of falling rates as soon as possible.

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