Latest news with #JarrodKerr
Reuters
6 days ago
- Business
- Reuters
New Zealand home prices to rise 3.8% in 2025 as rate cuts support the market
BENGALURU, June 5 (Reuters) - New Zealand home prices are expected to rise steadily through 2027 as the market recovers after posting annual declines in the last three years, according to a Reuters poll of property analysts who expect further monetary policy easing to boost confidence in the housing market. Since August, the Reserve Bank of New Zealand (RBNZ) has cut interest rates by 225 basis points, helping the market tick up, and is expected to cut by another 50 basis points by year-end, according to another Reuters poll. That would help further reduce mortgage rates which have already fallen nearly 20% from when policy rates were at a 15-year high a year ago. When asked what impact would RBNZ rate cuts have on the market this year, 10 of 12 respondents to an additional question in the May 16-June 4 poll, said they would be stimulative while two said they would have no impact. Average home prices were forecast to rise 3.8% this year, according to the median forecast of 14 property analysts polled, albeit slower than the 5.0% predicted forecast in a February poll. "There's a lot of uncertainty out there at the moment. Buyers are still a little bit more hesitant than we thought. The rebound, although it started, is not quite as strong as we had hoped for," said Jarrod Kerr, chief economist at Kiwibank. "We are pushing back our expectations for the recovery more into 2026. It's not that the story's changed, it's just that the story is being delayed." Prices are expected to climb 6.0% and 5.1% in 2026 and 2027 respectively. Prices boomed during the COVID-19 pandemic and while they have fallen nearly 20% from their late-2021 peak - reversing only around half their COVID gains - the market continues to favour existing homeowners who have built significant equity. Home prices are approximately six times the average household income and homeownership remains out of reach for many first-time buyers. With the economy only emerging from a recession late last year and high unemployment weighing on household spending, saving for a deposit remains a challenge for people wanting to make their first step onto the property ladder in one of the most expensive housing markets among OECD countries. Offering some hope, housing supply in New Zealand has increased over the past few months as buyers are seeking properties with lower price points. Supply of housing increased 6.2% in April from a year ago, according to REINZ. With borrowing costs falling and supply rising, nine of 11 analysts said purchasing conditions for first-time buyers would improve over the coming year. Two said they would worsen. "It's still difficult to get onto the housing ladder. But it was practically impossible by the end of 2021, where house prices went up 50% in two years from levels that people generally agreed were too high to start with," said Sharon Zollner, chief economist at ANZ. "We haven't solved our housing affordability problem but it is easier than it was, so some first home buyers are taking advantage of this opportunity. But New Zealand house prices are still very expensive in an international comparison relative to incomes and rents." Urban home rents were expected to rise 3.0% this year according to a smaller sample of forecasters, outpacing the 2.2% inflation rate projected in a separate Reuters poll. (Other stories from the Q2 Reuters housing market polls)
RNZ News
7 days ago
- Business
- RNZ News
Two banks cut rates, how much further could they go?
ASB cut some of its mortgage interest rates on Wednesday. Photo: RNZ / Marika Khabazi Two major banks have cut interest rates in recent days but economists say it's not clear how much further retail home loan rates have to move. ANZ on Tuesday cut its 18-month fixed rate special by 10 basis points to 4.89 percent. The six-month rate dropped by 20 to 5.29 percent. Then on Wednesday morning, ASB cut a range of its fixed home loan rates by up to 20 basis points. It was the bank's seventh fixed rate mortgage drop of 2025. Its six-month rate drops by 14 basis points to 5.45 percent, its one-year by four basis points to 4.95 percent, its 18-month rate by 10 basis points to 4.89 percent, its two-year by four basis points to 4.95 percent and its three-year by 20 basis points to 5.15 percent. Jarrod Kerr, chief economist at Kiwibank, said the outlook for interest rates was not as clear as it had been. Wholesale rates had moved up a bit since the Reserve Bank's latest official cash rate review. The fact that the decision to cut the rate by 25bps went to a vote and there had been commentary around inflation risks had made markets less convinced further cuts were coming. "They're saying they're going to feel their way through from now. That's fine, I get it but the markets have taken that as a reduced likelihood of going to 2.75 percent." The two-year swap rate hit a trough of 3.05 percent and had lifted to 3.26 percent. "I do think there's more downside to retail rates across the curve but I admit we're getting close to the endpoint." He said if his forecast was correct and the OCR dropped to 2.5 percent, retail rates would have further to fall. "If I'm wrong and they stop cutting at 3 percent then I think we're pretty close to being done on the mortgage space." He said it had reached the point where forecasters were disagreeing over a difference of 50 basis points. "This time last year you had two calling for a 6 percent cash rate then you had Kiwibank calling for a 2.5 percent cash rate. That's wildly, wildly different views…. Now we're all arguing over 50bps so it's not a massive thing and it just shows you that we are getting closer to the bottom." Infometrics chief executive Brad Olsen agreed rates could fall a bit further but that it was clear they were close to the lowest point. "We have said that a number of times, of course, and so there's a question mark on how much lower they will go. "Given you've now seen more of a signal from the Reserve Bank we are close to the low point for the OCR, given you are seeing a bit more activity picking up in the broader housing market, there does become that feeling there's not as much downside coming through." He said a lot could change based on global economic changes but households were increasingly locking in for longer, wanting more stability. "That suggests there are a few more adjustments to come through but most of the big bulky falls and cuts to interest rates have already emerged." Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
The Advertiser
28-05-2025
- Business
- The Advertiser
Reserve Bank of New Zealand cuts rates to 3.25 per cent
New Zealand's economic downward spiral continues to be recognised by its central bank, which has cut rates for a sixth straight meeting. The Reserve Bank of New Zealand (RBNZ) reduced the official cash rate (OCR) by 25 basis points to 3.25 per cent on Wednesday. It has also issued an updated future track, downgrading a forecast to have the OCR sitting at 2.9 per cent by year's end. With headline inflation back in the target band, at 2.5 per cent, Governor Christian Hawkesby said conditions were right for another cut. "Core inflation is declining and there is spare productive capacity in the economy," he said. Spare capacity might be an understatement. New Zealand is enduring a tough run of low growth, or as was the case last year, a deep six-month recession when the economy shrunk by more than two per cent. Responding to the environment, as well as shrunken inflation, the RBNZ has cut the OCR 225 basis points in nine months. Leading bankers want it to go further, and quickly, to improve business conditions. Kiwibank chief economist Jarrod Kerr said domestic weakness and overseas uncertainty put the case for a bigger rate cut now, before landing at 2.5 per cent soon. "The economy needs stimulus, not restraint," Mr Kerr told Newstalk ZB. "These tariffs, no matter how much they get dialled back ... it's still a tariff across the world, it's still a negative. It still puts deflationary pressure on the economy. "We're saying get it into stimulatory territory and lets kickstart the economy into next year." Arguing for the prudent pathway of the 25 basis point cut, Mr Hawkesby said it was not clear how global heavyweights would respond to the US-led trade war. "For example, it is possible that China could respond to weaker economic activity with a sizeable fiscal stimulus," he said. The updated forecasts also predict shallow GDP growth of just 1.8 per cent this year, but in better news, an unemployment rate peaking at just 5.2 per cent. ANZ chief economist Sharon Zollner agreed there was a need for assistance from monetary policy. "It's been a bit stop-start. So, we thought maybe the country just needs a bit more of a push in the small of the back to make sure that we keep moving forward," she said. A number of Kiwi banks moved their rates ahead of the well-telegraphed cut, with BNZ shaving 25 basis points off its floating rates, and offering 4.89 per cent for an 18-month fixed term. ANZ bettered that fixed rate, with 4.85 per cent on offer over the same time frame. With a clearly signposted change, the Co-operative Bank moved a fortnight ago, dropping its floating rate by 25 basis points. New Zealand's economic downward spiral continues to be recognised by its central bank, which has cut rates for a sixth straight meeting. The Reserve Bank of New Zealand (RBNZ) reduced the official cash rate (OCR) by 25 basis points to 3.25 per cent on Wednesday. It has also issued an updated future track, downgrading a forecast to have the OCR sitting at 2.9 per cent by year's end. With headline inflation back in the target band, at 2.5 per cent, Governor Christian Hawkesby said conditions were right for another cut. "Core inflation is declining and there is spare productive capacity in the economy," he said. Spare capacity might be an understatement. New Zealand is enduring a tough run of low growth, or as was the case last year, a deep six-month recession when the economy shrunk by more than two per cent. Responding to the environment, as well as shrunken inflation, the RBNZ has cut the OCR 225 basis points in nine months. Leading bankers want it to go further, and quickly, to improve business conditions. Kiwibank chief economist Jarrod Kerr said domestic weakness and overseas uncertainty put the case for a bigger rate cut now, before landing at 2.5 per cent soon. "The economy needs stimulus, not restraint," Mr Kerr told Newstalk ZB. "These tariffs, no matter how much they get dialled back ... it's still a tariff across the world, it's still a negative. It still puts deflationary pressure on the economy. "We're saying get it into stimulatory territory and lets kickstart the economy into next year." Arguing for the prudent pathway of the 25 basis point cut, Mr Hawkesby said it was not clear how global heavyweights would respond to the US-led trade war. "For example, it is possible that China could respond to weaker economic activity with a sizeable fiscal stimulus," he said. The updated forecasts also predict shallow GDP growth of just 1.8 per cent this year, but in better news, an unemployment rate peaking at just 5.2 per cent. ANZ chief economist Sharon Zollner agreed there was a need for assistance from monetary policy. "It's been a bit stop-start. So, we thought maybe the country just needs a bit more of a push in the small of the back to make sure that we keep moving forward," she said. A number of Kiwi banks moved their rates ahead of the well-telegraphed cut, with BNZ shaving 25 basis points off its floating rates, and offering 4.89 per cent for an 18-month fixed term. ANZ bettered that fixed rate, with 4.85 per cent on offer over the same time frame. With a clearly signposted change, the Co-operative Bank moved a fortnight ago, dropping its floating rate by 25 basis points. New Zealand's economic downward spiral continues to be recognised by its central bank, which has cut rates for a sixth straight meeting. The Reserve Bank of New Zealand (RBNZ) reduced the official cash rate (OCR) by 25 basis points to 3.25 per cent on Wednesday. It has also issued an updated future track, downgrading a forecast to have the OCR sitting at 2.9 per cent by year's end. With headline inflation back in the target band, at 2.5 per cent, Governor Christian Hawkesby said conditions were right for another cut. "Core inflation is declining and there is spare productive capacity in the economy," he said. Spare capacity might be an understatement. New Zealand is enduring a tough run of low growth, or as was the case last year, a deep six-month recession when the economy shrunk by more than two per cent. Responding to the environment, as well as shrunken inflation, the RBNZ has cut the OCR 225 basis points in nine months. Leading bankers want it to go further, and quickly, to improve business conditions. Kiwibank chief economist Jarrod Kerr said domestic weakness and overseas uncertainty put the case for a bigger rate cut now, before landing at 2.5 per cent soon. "The economy needs stimulus, not restraint," Mr Kerr told Newstalk ZB. "These tariffs, no matter how much they get dialled back ... it's still a tariff across the world, it's still a negative. It still puts deflationary pressure on the economy. "We're saying get it into stimulatory territory and lets kickstart the economy into next year." Arguing for the prudent pathway of the 25 basis point cut, Mr Hawkesby said it was not clear how global heavyweights would respond to the US-led trade war. "For example, it is possible that China could respond to weaker economic activity with a sizeable fiscal stimulus," he said. The updated forecasts also predict shallow GDP growth of just 1.8 per cent this year, but in better news, an unemployment rate peaking at just 5.2 per cent. ANZ chief economist Sharon Zollner agreed there was a need for assistance from monetary policy. "It's been a bit stop-start. So, we thought maybe the country just needs a bit more of a push in the small of the back to make sure that we keep moving forward," she said. A number of Kiwi banks moved their rates ahead of the well-telegraphed cut, with BNZ shaving 25 basis points off its floating rates, and offering 4.89 per cent for an 18-month fixed term. ANZ bettered that fixed rate, with 4.85 per cent on offer over the same time frame. With a clearly signposted change, the Co-operative Bank moved a fortnight ago, dropping its floating rate by 25 basis points. New Zealand's economic downward spiral continues to be recognised by its central bank, which has cut rates for a sixth straight meeting. The Reserve Bank of New Zealand (RBNZ) reduced the official cash rate (OCR) by 25 basis points to 3.25 per cent on Wednesday. It has also issued an updated future track, downgrading a forecast to have the OCR sitting at 2.9 per cent by year's end. With headline inflation back in the target band, at 2.5 per cent, Governor Christian Hawkesby said conditions were right for another cut. "Core inflation is declining and there is spare productive capacity in the economy," he said. Spare capacity might be an understatement. New Zealand is enduring a tough run of low growth, or as was the case last year, a deep six-month recession when the economy shrunk by more than two per cent. Responding to the environment, as well as shrunken inflation, the RBNZ has cut the OCR 225 basis points in nine months. Leading bankers want it to go further, and quickly, to improve business conditions. Kiwibank chief economist Jarrod Kerr said domestic weakness and overseas uncertainty put the case for a bigger rate cut now, before landing at 2.5 per cent soon. "The economy needs stimulus, not restraint," Mr Kerr told Newstalk ZB. "These tariffs, no matter how much they get dialled back ... it's still a tariff across the world, it's still a negative. It still puts deflationary pressure on the economy. "We're saying get it into stimulatory territory and lets kickstart the economy into next year." Arguing for the prudent pathway of the 25 basis point cut, Mr Hawkesby said it was not clear how global heavyweights would respond to the US-led trade war. "For example, it is possible that China could respond to weaker economic activity with a sizeable fiscal stimulus," he said. The updated forecasts also predict shallow GDP growth of just 1.8 per cent this year, but in better news, an unemployment rate peaking at just 5.2 per cent. ANZ chief economist Sharon Zollner agreed there was a need for assistance from monetary policy. "It's been a bit stop-start. So, we thought maybe the country just needs a bit more of a push in the small of the back to make sure that we keep moving forward," she said. A number of Kiwi banks moved their rates ahead of the well-telegraphed cut, with BNZ shaving 25 basis points off its floating rates, and offering 4.89 per cent for an 18-month fixed term. ANZ bettered that fixed rate, with 4.85 per cent on offer over the same time frame. With a clearly signposted change, the Co-operative Bank moved a fortnight ago, dropping its floating rate by 25 basis points.
West Australian
28-05-2025
- Business
- West Australian
Reserve Bank of New Zealand cuts rates to 3.25 per cent
New Zealand's economic downward spiral continues to be recognised by its central bank, which has cut rates for a sixth straight meeting. The Reserve Bank of New Zealand (RBNZ) reduced the official cash rate (OCR) by 25 basis points to 3.25 per cent on Wednesday. It has also issued an updated future track, downgrading a forecast to have the OCR sitting at 2.9 per cent by year's end. With headline inflation back in the target band, at 2.5 per cent, Governor Christian Hawkesby said conditions were right for another cut. "Core inflation is declining and there is spare productive capacity in the economy," he said. Spare capacity might be an understatement. New Zealand is enduring a tough run of low growth, or as was the case last year, a deep six-month recession when the economy shrunk by more than two per cent. Responding to the environment, as well as shrunken inflation, the RBNZ has cut the OCR 225 basis points in nine months. Leading bankers want it to go further, and quickly, to improve business conditions. Kiwibank chief economist Jarrod Kerr said domestic weakness and overseas uncertainty put the case for a bigger rate cut now, before landing at 2.5 per cent soon. "The economy needs stimulus, not restraint," Mr Kerr told Newstalk ZB. "These tariffs, no matter how much they get dialled back ... it's still a tariff across the world, it's still a negative. It still puts deflationary pressure on the economy. "We're saying get it into stimulatory territory and lets kickstart the economy into next year." Arguing for the prudent pathway of the 25 basis point cut, Mr Hawkesby said it was not clear how global heavyweights would respond to the US-led trade war. "For example, it is possible that China could respond to weaker economic activity with a sizeable fiscal stimulus," he said. The updated forecasts also predict shallow GDP growth of just 1.8 per cent this year, but in better news, an unemployment rate peaking at just 5.2 per cent. ANZ chief economist Sharon Zollner agreed there was a need for assistance from monetary policy. "It's been a bit stop-start. So, we thought maybe the country just needs a bit more of a push in the small of the back to make sure that we keep moving forward," she said. A number of Kiwi banks moved their rates ahead of the well-telegraphed cut, with BNZ shaving 25 basis points off its floating rates, and offering 4.89 per cent for an 18-month fixed term. ANZ bettered that fixed rate, with 4.85 per cent on offer over the same time frame. With a clearly signposted change, the Co-operative Bank moved a fortnight ago, dropping its floating rate by 25 basis points.
Perth Now
28-05-2025
- Business
- Perth Now
Reserve Bank of New Zealand cuts rates to 3.25 per cent
New Zealand's economic downward spiral continues to be recognised by its central bank, which has cut rates for a sixth straight meeting. The Reserve Bank of New Zealand (RBNZ) reduced the official cash rate (OCR) by 25 basis points to 3.25 per cent on Wednesday. It has also issued an updated future track, downgrading a forecast to have the OCR sitting at 2.9 per cent by year's end. With headline inflation back in the target band, at 2.5 per cent, Governor Christian Hawkesby said conditions were right for another cut. "Core inflation is declining and there is spare productive capacity in the economy," he said. Spare capacity might be an understatement. New Zealand is enduring a tough run of low growth, or as was the case last year, a deep six-month recession when the economy shrunk by more than two per cent. Responding to the environment, as well as shrunken inflation, the RBNZ has cut the OCR 225 basis points in nine months. Leading bankers want it to go further, and quickly, to improve business conditions. Kiwibank chief economist Jarrod Kerr said domestic weakness and overseas uncertainty put the case for a bigger rate cut now, before landing at 2.5 per cent soon. "The economy needs stimulus, not restraint," Mr Kerr told Newstalk ZB. "These tariffs, no matter how much they get dialled back ... it's still a tariff across the world, it's still a negative. It still puts deflationary pressure on the economy. "We're saying get it into stimulatory territory and lets kickstart the economy into next year." Arguing for the prudent pathway of the 25 basis point cut, Mr Hawkesby said it was not clear how global heavyweights would respond to the US-led trade war. "For example, it is possible that China could respond to weaker economic activity with a sizeable fiscal stimulus," he said. The updated forecasts also predict shallow GDP growth of just 1.8 per cent this year, but in better news, an unemployment rate peaking at just 5.2 per cent. ANZ chief economist Sharon Zollner agreed there was a need for assistance from monetary policy. "It's been a bit stop-start. So, we thought maybe the country just needs a bit more of a push in the small of the back to make sure that we keep moving forward," she said. A number of Kiwi banks moved their rates ahead of the well-telegraphed cut, with BNZ shaving 25 basis points off its floating rates, and offering 4.89 per cent for an 18-month fixed term. ANZ bettered that fixed rate, with 4.85 per cent on offer over the same time frame. With a clearly signposted change, the Co-operative Bank moved a fortnight ago, dropping its floating rate by 25 basis points.
