Reserve Bank of New Zealand Cuts Cash Rate to Boost Borrowing

The Reserve Bank of New Zealand has reduced the official cash rate (OCR) by 25 basis points, bringing it to 2.25 percent, the lowest level since June 2022. This decision, announced on November 26, 2025, aims to support economic recovery and provide relief to borrowers as the holiday season approaches.

Mortgage expert Nathan Miglani from Squirrel, who closely monitors housing and mortgage trends, welcomed the cut as anticipated by many in the industry. “The OCR cut will create more momentum in the property market. This points to recovery in the market,” he stated in an interview with The Indian Weekender. While this is positive news for borrowers, Miglani cautioned that business confidence in sectors such as hospitality and retail remains low. He noted that the full effects of an OCR cut typically take around nine months to manifest, emphasizing that the impact of this decision will be more evident in 2026.

As the lower interest rates take effect, Miglani advised borrowers to seek guidance before fixing their home loans. The finance minister, Nicola Willis, echoed this sentiment by urging banks to pass on as much of the OCR cut as possible to home loan rates. Following the Reserve Bank’s announcement, many banks began lowering their floating mortgage rates.

During a speech in Auckland, Willis expressed her hope that mortgage-holders would feel the benefits of the cut. The Reserve Bank will be closely monitoring the banks’ responses to ensure compliance with the new rate.

Miglani further highlighted the intensifying competition among banks, characterizing it as a “mortgage war” that is leading to attractive cashback offers for borrowers. Looking forward, he projected that the property market is likely to gain strength in 2026, which should further enhance borrower confidence.

With the OCR now at its lowest level in over three years, the move reflects the Reserve Bank’s commitment to stimulating the economy and encouraging consumer spending during a critical period. The anticipated growth in the property market could provide a much-needed boost for both borrowers and lenders alike as the country navigates the ongoing economic challenges.