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OCR slashed twelfth time in a row
OCR updates and insights from Chief Economist Kelvin Davidson.
By Kelvin Davidson 26 November 2025
The Reserve Bank’s Monetary Policy Committee delivered a widely expected 0.25% cut to the official cash rate (OCR) today, taking it down to 2.25%.
According to Kelvin Davidson, Chief Property Economist at Cotality, an initial read of the commentary and forecasts suggests this could be the final cut in the current cycle. "There is time now for everyone to sit back and watch how the effects play out," he says.
The economic outlook
To provide context, Kelvin notes that the RBNZ expects GDP to have risen by more than 1% over the final six months of this year, with growth accelerating to around 3% in 2026.
The employment outlook also appears to be stabilising. "Employment is thought to have troughed already, with the unemployment rate set to ease down to 5% over the course of next year," Kelvin explains. "Headline inflation should also drop from here."
Where to next for the OCR?
The forward track for the OCR bottoms out at a quarterly average of 2.20% in the second quarter of 2026. While this implies a possibility of one further cut, Kelvin believes it is unlikely if the economy performs as predicted.
"If the ‘green shoots’ strengthen and the economy performs as expected, the chances of that cut seem small," he says. "At this stage, the RBNZ doesn’t think there’s much scope for the OCR to rise again until 2027."
Impact on the housing market
For the property market, today’s cut may not trigger immediate changes. Kelvin points out that many banks had already lowered fixed mortgage rates in recent weeks—especially for one-year terms—and have been competing hard with 1.5% cashback offers.
However, the medium-term outlook is positive. "Given lower financing costs and the prospect of a stronger economy in 2026, there’s a solid case for thinking that property sales activity will continue to rise next year."
This activity is expected to bring a degree of price growth. "The RBNZ itself predicts a rise of about 4% in 2026, and there’s no major reason to disagree," says Kelvin. "It would be a modest lift by past standards, but consistent with the fact we now have debt to income ratio caps."
Past OCR Updates
Catch up on previous OCR updates and commentary:
Author
Chief Property Economist, Cotality - cotality.com
Kelvin joined Cotality (previously CoreLogic) in March 2018. 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 Cotality, 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.
