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The Reserve Bank of New Zealand has already slashed the official cash rate (OCR) by 3.0% this cycle, taking it to 2.5% from its recent peak of 5.5%.
This reduction in the OCR has slashed mortgage rates, which, as illustrated below by Justin Fabo from Antipodian Macro, are now tracking at around pre-pandemic levels.
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However, the sharp reduction in mortgage rates has failed to stimulate the housing market, where prices continue to fall in real inflation-adjusted terms, owing to an oversupply of homes listed for sale.
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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.