Big Move: Reserve Bank Cuts OCR by 50 bps to 2.5%
The Reserve Bank has surprised many by cutting the Official Cash Rate (OCR) by 0.5%, bringing it down to 2.5%. This move is aimed at boosting confidence and giving the economy a lift after a slow patch.
Why the Cut Happened
The Reserve Bank wants to make it cheaper for people and businesses to borrow and spend. Inflation is now sitting close to the top of the target range but is expected to ease back towards 2% next year, which gives the Bank room to lower rates.
How Banks Are Responding
Banks have already started passing the cut on to customers.
- ANZ was first, reducing its floating home loan rate by 0.4%.
- Other major banks followed with similar moves.
This means floating and short-term fixed rates are starting to come down, giving homeowners some much-needed breathing room.
What It Means for Borrowers
If you’re on a floating or short fixed term, you’ll likely see lower repayments soon.
If you’re coming off a higher fixed rate, the next refix could be at a more affordable level. Lower interest costs could also mean it’s a good time to review your loan structure or look at refinancing options.
What Could Happen Next
Economists expect the Reserve Bank might cut rates again, possibly by another 0.25%, if inflation keeps easing.
But the Bank will be cautious — it doesn’t want to reignite inflation or push house prices up too fast.
In Short
This cut is good news for borrowers and first-home buyers, and it shows the Reserve Bank is focused on keeping the economy moving. The next few months will show whether lower rates help rebuild confidence and activity across the housing market.
At Vega Mortgages, our advisers are here to help you make the most of the changing rate environment - whether that means refinancing, restructuring, or planning your next move with confidence.