Do Payments Go Down When You Remortgage? NZ Guide with Real Examples
Will remortgaging lower your repayments? Learn when payments fall or rise in NZ, the math, fees, and steps. Clear examples, checklists, and risks to avoid.
Interest Rates New Zealand: What’s Happening and How It Affects You
New Zealand’s interest rates have been in the spotlight all year. Whether you’re buying a home, saving for a trip, or looking at a car loan, the numbers the Reserve Bank sets dictate how much you pay or earn. Let’s break down what’s going on, why it matters, and what you can do right now.
Why the Reserve Bank’s Rate Moves
The Reserve Bank of New Zealand (RBNZ) controls the official cash rate (OCR). When inflation climbs, the RBNZ usually hikes the OCR to cool spending. When growth slows, it cuts the OCR to make borrowing cheaper. Recent data shows inflation nudging above the 2 % target, so the OCR has risen a few basis points each quarter.
Those moves ripple through the banking system. Banks add a margin to the OCR and set their own mortgage, personal loan and credit‑card rates. A 0.25 % OCR rise can mean a 0.5‑1 % jump in a typical home loan rate. That adds up quickly on a $500,000 mortgage.
Real‑World Impact: Mortgages, Savings, and Everyday Loans
Mortgages. If your loan is on a variable rate, expect your repayments to increase as the OCR climbs. Fixed‑rate borrowers are insulated until their term ends, but they may face higher rates when they refinance.
Savings. Higher rates are good news for savings accounts and term deposits. A 1 % rise can boost a $10,000 deposit by $100 a year. Look for banks that pass the OCR change on to depositors – not all do.
Credit cards & personal loans. Variable‑rate credit cards can see their APR jump by a few percent. If you carry a balance, those extra costs eat into any rewards you earn. Personal loans follow the same pattern – a higher OCR means a higher APR.
So what can you do?
- Shop around. Even a 0.25 % rate difference saves you thousands over a loan’s life.
- Lock in a fixed rate. If you think rates will keep rising, a fixed term protects you for the next 1‑5 years.
- Boost your savings. Move cash into high‑interest accounts quickly after an OCR hike.
- Pay down variable debt. Reducing your credit‑card balance cuts the impact of higher APRs.
Keep an eye on the RBNZ’s monthly announcement – it’s the fastest way to know where rates are headed. Most news sites and bank websites post the new OCR as soon as it’s released.
In short, New Zealand interest rates affect everything from your mortgage to the interest you earn on a savings account. Understanding the OCR and its trickle‑down effect helps you act before the next change. Compare rates, consider fixing your loan, and keep your savings in the right place. That way, you stay in control whether rates go up or down.
