NZ Banks Urge Borrowers to Lock in Mortgage Rates Amid Easing Inflation Expectations

New Zealand's banks are urging borrowers to consider locking in mortgage rates despite easing inflation expectations.

ASB said that fixing for one of the longer terms still appears attractive as it would insulate borrowers from a trend higher in the OCR over the next couple of years. The OCR currently sits at 2.5% following a July hike, with further increases expected at the RBNZ's September and December meetings.

Kiwibank said that rates are still likely to head to 3% by the end of the year, but the threat of more hikes is easing, according to the RBNZ's Q3 Survey of Expectations which showed one-year-ahead inflation expectations falling to 2.6%, down sharply from 3.41% the previous quarter.

However, ASB cautioned against reading too much into the improvement just yet, given how much global volatility is clouding the picture. The bank said that 'the signal-to-noise ratio is low currently' and added that the Reserve Bank will want confirmation from other inflation surveys before easing its tightening stance.