Mortgage rates tipped to stay high

The Reserve Bank of New Zealand is tipped to cut the official cash rate this month, but mortgage holders and first home buyers are warned not to expect lower interest rates yet.

ASB chief economist Nick Tuffley expects the Reserve Bank to drop the OCR 100 points to 6.5 per cent at the scheduled meeting on October 23. He says it is unlikely to act before then.

By the end of the year, Tuffley expects the rate will be reduced to 6 per cent and a further cut in the early part of next year will drop it to 5.5 per cent by March.

ANZ senior economist Khoon Goh says under normal circumstances a drop in the OCR would translate into lower mortgage rates and improve home affordability.

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By NZ Herald, 12 October 2008

Posted: 12 Oct 2008

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