Buying guide

OCR remains at current 15-year high

Chief Property Economist Kelvin Davidson unpacks the May cash rate decision and what it means for the housing market.

Last updated: 22 May 2024

As predicted, the Reserve Bank of New Zealand (RBNZ) has left the official cash rate (OCR) unchanged at 5.5% in an announcement made on Wednesday May 22, 2024.

RBNZ’s general economic forecasts were also largely unaltered, although it’s now thought that we might expect interest rates to remain higher for longer than had been previously suggested. This is because the desired return of inflation to the 1 – 3% target band has been pushed back to Q4, rather than the earlier Q3 expectation. As inflation may also stay high in 2025, there was no overall surprise that the OCR has remained on a higher track too.

According to figures that RBNZ released alongside the OCR announcement, Aotearoa has come out of the technical recession announced earlier this year. However, GDP (gross domestic product) growth will be highly restricted during 2024 – 25, with unemployment likely to rise due to overall job market stagnation.

While factors such as bank competition and offshore finance rates also have a part to play in mortgage rate settings, the fact that an OCR cut is now more likely to happen in 2025 than 2024, means it’s sensible to expect a similar story for mortgage rates.

This means that conditions for new borrowers and those with existing mortgages (who will need to reprice up to current market rates) seem likely to remain challenging for at least six to nine months. Even if mortgage rates start to fall more substantially in 2025, that would coincide with the limiting influence of the expected debt-to-income restrictions.

When combined with a potential continuation of soft sales volumes and property values, the overall picture is one of underwhelming upturn for the property market this year. And, with some job cuts now showing through, downside risks to NZ house prices remain, particularly as buyers continue to enjoy plenty of choice due to elevated listings.


Kelvin Davidson
Kelvin Davidson

Chief Property Economist, CoreLogic -

Kelvin joined CoreLogic in March 2018 as Senior Research Analyst, before moving into his current role of Chief Economist. He brings with him a wealth of experience, having spent 15 years working largely in private sector economic consultancies in both New Zealand and the UK.

In his role with CoreLogic Kelvin’s focus is on keeping up to date with what’s going on in the property market and continually finding different ways for viewing and interpreting it. Kelvin’s economics background means that he knows his way around a spreadsheet, but more importantly he always puts more emphasis on providing the key insights and telling a story, whether his audience be clients or the media.