Jenee Tibshraeny: NZ Herald Wellington business editor on what today's OCR cut means for mortgages

Many mortgage holders will be relieved to hear that the OCR has been brought down by an addition 50 basis points.

Despite this, one expert is warning that borrowers might need to keep their enthusiasm about the interest rates in check.

NZ Herald Wellington business editor Jenee Tibshraeny explained that there were other factors impacting interest rates.

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Episode Transcript

Speaker 1 (00:00):
Janetibstradi, the Herald's Wellington Business editor, is with us. Now,
how do you know? Okay, so how many banks have
dropped the mortgage rates by half a percentage point then.

Speaker 2 (00:09):
Am out straight straight away, straight after the Reserve Bank
announced the cuts. In fact, one bank I got an
email from them before I got a message from the
Reserve Bank saying that it was cutting the OCR by
fifty basis points. So they've all moved, They've all moved quickly.

Speaker 1 (00:25):
That's good. Okay. What are we expecting from how the
US election is going to affect what happens from here
on in? Because it sounds like the Reserve Bank's a
little worried about it.

Speaker 2 (00:33):
Yeah, yeah, Look, I think the Reserve Bank today just
Adrianal tempered people's expectations a little bit, and in fact
he said the thrill might not be as big as
what it looks like. Those were Adrianaal's words today. Now,
the reason for this is that the OCR isn't the
only thing that influences the mortgage rates that you and

(00:53):
I pay. Banks also get funding from offshore markets. They
borrow money from overseas, and the issue here is that
the interest rates that are being charged for these money
markets around the world are elevated at the moment, and
that is because of the outcome of the U s election.
So because Donald Trump is promising tax cuts in the US,

(01:16):
people think that the deficit in the US will be deeper.
You know that the US will continue being in a
lot of debt. And also Donald Trump with the tariffs
and things that he's proposing, they could be inflationary. All
of this creates more uncertainty and more risk, and investors
price that risk into assets. And if there's more risk,

(01:37):
there's you know that there's a risk premiere priced in
that elevates interest rates. So if those interest rates in
global money markets are higher, then that influences banks funding costs,
and that influences the interest rates that we pay. So
you know that it's still a positive story. Mortgage rates
are still coming down. We should just be a little

(01:58):
bit cautious about the extent to which they will fall.

Speaker 1 (02:02):
Yeah, that's a very good point. You know, thanks for
talking through. Appreciate it. You know. Tube Trainee, the Herald's
Wellington Business

Speaker 2 (02:06):
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