Many economists think the Reserve Bank will cut the OCR in November this year.
Westpac says the OCR might go down to 4.5% by the end of 2025.
Who knows what the Reserve Bank will do?
But we don’t need an OCR cut for mortgage interest rates to start coming down. We’ve seen that over the last few weeks.
Last week, the Reserve Bank didn’t cut the OCR. But they did soften their language.
That caused Westpac to start cutting.
But it is true that the big cuts to mortgage interest rates will come as the case for an OCR cut becomes clearer.
That will happen as more data is released.
Is it the light at the end of the tunnel?
We’re not out of the woods yet. Inflation is still too high. Interest rates are still hurting.
But the last 2 weeks provide hope.
- We’ve seen softer language from the Reserve Bank,
- the bank’s borrowing costs have plunged,
- and the banks have dropped their rates.
We can’t party like it’s early 2021 (or even 2019), where interest rates had a 2 or 3 in front of them.
Those days probably won’t come back anytime soon. Maybe never.
But within a year or two, those excruciatingly high interest rates could be a memory.