Reserve Bank of New Zealand Cuts Interest Rates to Aid Borrowers

The Reserve Bank of New Zealand has reduced the official cash rate (OCR) by 25 basis points to 2.25 percent, the lowest level since June 2022. This decision, announced on November 26, 2025, is designed to support economic recovery and bolster borrower confidence ahead of the holiday season.

Mortgage expert Nathan Miglani from Squirrel, who monitors housing and mortgage trends, noted that the rate cut was anticipated by many in the industry. He described it as welcome news for borrowers, stating, “The OCR cut will create more momentum in the property market. This points to recovery in the market.”

Despite the optimistic outlook for borrowers, Miglani cautioned that business confidence in sectors such as hospitality and retail remains low. He explained that the full effects of an OCR cut generally take around nine months to become evident. “Today’s OCR cut impact will be visible next year,” he added.

As interest rates decrease, borrowers are encouraged to seek advice before fixing their home loans. Finance Minister Nicola Willis called on banks to pass on “as much as possible” of the OCR cut to home loan rates. Following the Reserve Bank’s announcement, several banks began lowering floating mortgage rates starting Wednesday.

In a statement made in Auckland on Thursday, Willis expressed hope that mortgage holders would benefit from the rate reduction. She also indicated that the Reserve Bank will monitor the banks’ responses to the OCR cut to ensure that the benefits reach consumers.

Migiani highlighted the intensifying competition among banks, referring to it as a “mortgage war.” This competitive environment has led to attractive cashback offers for borrowers.

Looking ahead, Miglani projects that the property market will strengthen in 2026, which could further enhance borrower confidence. The lowered interest rates, he notes, are likely to create more opportunities for prospective homebuyers and those looking to refinance their loans.

As the economic landscape evolves, the impact of the Reserve Bank’s decision will play a crucial role in shaping the financial environment for borrowers in New Zealand. The ongoing developments in the mortgage sector will be closely watched by both consumers and industry experts alike.