OCR

PHOTO: The AM Show; Image – Getty Images

Banks are picking the official cash rate (OCR) to rise over the next few years, potentially pushing up the cost of paying down a mortgage – but first-home buyers hoping for a break might have to wait a bit longer yet.

ANZ, the biggest of the ‘big four’ banks in New Zealand, says it expects the OCR to increase 400 percent – from its present 0.25 percent to 1.25 percent – by the end of 2023. ASB thinks it’ll hit that mark in early 2024.

The Reserve Bank will meet to decide its next move on May 26, after the delivery of this week’s budget.

WE DON’T ROAST OUR BEANS UNTIL WE HAVE YOUR ORDER

Fergs Coffee

“There is no question that the picture is evolving and that it is getting harder to argue that super-stimulatory monetary policy is the medicine that the economy needs for a prolonged period,” said ANZ chief economist Sharon Zollner.

Interest rates plunged last year to stimulate the economy hit hard by COVID-19 and the subsequent lockdowns, with employment widely – and ultimately wrongly – tipped to hit double-digits.

Independent economist Cameron Bagrie says it’s a good sign that there’s talk of it rising again.

“It’s a sign of success,” he told The AM Show on Tuesday. “It’s a sign that the Reserve Bank is on track to meet what’s called their remit – full employment. We’ve got unemployment now down to 4.7 percent and it’s dropping. Inflation pressures are moving up. So the economic story here is a good one, a successful one – when you’ve got that economic success story, you don’t need interest rates as low for so long.”

READ MORE VIA NEWSHUB

MOST READ