OCR August Predictions - Will the RBNZ cut or hold? 📣
- TheLendingTeam
- Aug 14
- 3 min read
After last months OCR hold Kiwis are wondering what happens next.
In July the RBNZ held the OCR at 3.25% which came as a surprise to many Kiwis. However for us this was an expected outcome given the uncertainty with global factors such as US tariffs and domestic factors eg. the short-term spike in inflation. Interest rates haven’t moved much since July and with the next OCR review on August 20th many are curious on whether a cut is on the cards.
As usual there are mixed opinions between economists. Kiwibank’s Chief Economist Jarrod Kerr thinks the hold in July was a pause and another cut is on the way.
Watch Kiwibank’s podcast episode below to hear more 🎧
We believe Kiwis with fixed rate rollovers coming up should be considering both their short and long term options depending on their individual lending structure, risk tolerance and financial plans. This is why tailored financial advice before refixing online is important.
Earlier in the year we saw a trend of clients fixing short term ~6 months or remaining on floating in anticipation of rate cuts. However, this has recently shifted with more clients also considering medium to long-term fixed rates ~12 -36 months.
Our financial adviser Neville Modlin shares his thoughts 💭
“I had anticipated a 0.25% reduction in July, followed by a hold in August. By choosing not to cut in July, they signalled a cautious approach, which may have slowed momentum toward easing the recession. Holding steady now could mean a longer path to recovery. That said, I share Jarrod’s view, a rate cut now would help maintain progress ahead of the November OCR review. Reducing in August would send a strong, optimistic signal to the business sector, encouraging activity and boosting confidence across industries.”
We believe Kiwis with fixed rate rollovers coming up should be considering both their short and long term options depending on their individual lending structure, risk tolerance and financial plans. This is why tailored financial advice before refixing online is important.
Earlier in the year we saw a trend of clients fixing short term ~6 months or remaining on floating in anticipation of rate cuts. However, this has recently shifted with more clients also considering medium to long-term fixed rates ~12 -36 months.
What are interest rates doing?
As of 9am this morning, 14.08.2025, we've seen two major banks cut their interest rates ahead of the OCR review next week - Hopefully this is a positive sign!
*Minimum 20% equity, T&C’s and bank/lending criteria apply
6 month fixed: 5.09%
1 year fixed: 4.79%
18 month fixed: 4.79%
2 years fixed: 4.89%
3 years fixed: 5.05%
Client Case Study - "I can't decide which fixed rate to choose?"
Our clients home loan ~$700,000 had a fixed rate (5.99%) up for renewal in May 2025.
Interest rates had decreased since they refinanced the year before however, our clients were nervous when deciding how long to refix for due to the uncertainty in the interest rate market.
After discussing their personal circumstances and goals with their adviser, they were conflicted whether they should refix for 1 or 2 years as recommended to them by their adviser. Their main concern was they had experienced the sharp interest rate hikes post COVID which resulted in their entire home loan going from 3 to 6% and they did not want to be in this position again.
To help spread the risk associated with refixing their entire home loan at one fixed term rate, their adviser said an option to consider would be splitting their home loan into 2 or more smaller loans and refixing at different fixed terms. This meant their entire home loan would not refix all at the same time.
After discussing the different options further, our clients decided to restructure their home loan into two equal loans of $350,000 then refix one for 1 year and the other for 2 years.
Our advisers stay informed with the latest market updates and trends including economic predictions however, there is no crystal ball for predicting what the market or interest rates will do. Hence when deciding on your home loan structure it must be one you’re comfortable with based on your goals, plans and risk profile.
There is no one size fits all when it comes to loan structure as each homeowners personal goals and risk profile will influence an advisers’ recommendations. This includes splitting your home loan, there are circumstances where our advisers wouldn't recommend this strategy due to certain future plans, lending position and client preferences. This is why it's important to discuss any changes to your loan structure with your adviser.
Is your fixed rate expiring soon?
It's time for tailored financial advice from our team.
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