Century 21 New Zealand national manager Geoff Barnett said the surprise cash rate cut is a positive for many Kiwis, especially first home buyers, as banks pass on the cut, even if only partially.
“To see some key retail banks even make partial cuts is welcome news because earlier in the week few were expecting anything,” said Barnett.
“This is great for the likes of first homebuyers, it will help boost confidence in our dairy-dominated regions, and may even entice the likes of some retirees to trade in their low-yielding term deposits for an investment property commanding a good rental and promise of capital gain.
“These days with tighter lending rules, it’s not just about getting a deposit together, banks are really scrutinising people’s ability to service mortgage debt long-term.
"House prices keep going up in many parts of New Zealand, but falling interest rates help mitigate that and this may just get the likes of young couples and singles over the ‘mortgage approval’ line.”
Barnett says banks’ website mortgage calculators will be working hard with this news.
“People will be tapping in the new rates their bank might be offering and saying… maybe we can do this now. With rents soaring for many while at the same time some fixed rates now sit below 4.5%, it may be a good time to do your sums particularly when you factor in some cooling off in parts of the market in recent months.
“Six months ago many might have thought we can’t do it. Well six months on many sales times have lengthened, many prices have softened, and now interest rates get an unexpected cut. Hopefully these factors will help open the door to home ownership for more people,” says Barnett.
has said that inconsistencies between Reserve Bank communication and action risk the effectiveness of future RBNZ communication.
“Unexpected moves like this from a central bank cause disruption in financial markets. But more importantly, if a Central Bank Governor or other Central Bank representative signals one move but delivers something different, communication tools (such as speeches) could begin to lose their effectiveness,” the bank said in a note.”