August 2025 Market Update

OCR Cut to 3% — A Winning Move for Borrowers

On 20 August 2025, the Reserve Bank of New Zealand (RBNZ) slashed the Official Cash Rate (OCR) to 3.00%, down from 3.25%.
This marks the latest move in a series of cuts that began in 2024, following a hold at 3.25% in July.

What this means for mortgage holders:

• Refinancers and variable‑rate borrowers may benefit immediately via lower rates.

• The timing may be ideal for seeking better fixed‑rate refinancing deals.

Sources:
RBNZ, Interest.co.nz

Mortgage Rates: Nearing Their Low

• 1‑year fixed rates are hovering around 4.9%–4.95%, while floating rates sit between 6.3%–6.9%.

• The lowest advertised 6‑month fixed rate is 5.09%.

Insight for homeowners:

• If you're nearing a fixed term expiry, locking in now may secure a strong rate.

• Floating‑rate borrowers could see relief if the easing cycle continues.

Sources:
Opes Partners, Mortgage Masters

House Prices: Stabilisation Amid Declines

• CoreLogic data shows a 0.5% fall in median values from July to August — the sixth consecutive monthly decline.

• Median national value: NZ$811,583, now 16.8% below the February peak.

• The Home Value Index (HVI) indicates just a 0.4% drop over the past six months, hinting at a slowing pace of decline.

Sources:
CoreLogic NZ, Interest.co.nz

REINZ Market Dynamics: More Choice for Buyers

• July 2025 saw a rise in sales volumes year-on-year, even as listings dipped slightly from June.

• In August, median days to sell hit 50 — the longest for this month since 2008.

• Inventory climbed 30% year-on-year, reaching nearly 29,600 properties for sale.

Interpretation:

• Buyers are benefiting from wider choice and more negotiation power.

• Sellers may need to allow for longer lead times, especially if refinancing deadlines are approaching.

Sources:
REINZ, Property Brokers, Interest.co.nz

Regulatory Update: Reducing Capital Requirements

• RBNZ has proposed lowering the minimum capital for licensed lenders from NZ$30 million to NZ$5 million.

• Options include cutting capital buffers or allowing more flexible loss-absorbing instruments.

Why this matters:

• A more open lending market could lead to sharper rates and better deals.

• The final decision is expected before the end of 2025.

Sources:
RBNZ, Reuters

What it Means for New Zealand Borrowers

Lower borrowing costs ahead mean it's ideal time to renegotiate or refinance if you're an existing mortgage holder, for those looking to get into the market conditions are starting to look favourable.

Mortgage Rates: Fixed ~4.9%–5.09%, Floating ~6.3%–6.9%- Lock in now if your term ends soon; floaters may benefit further.

House Prices: Down ~0.5% (monthly); bottoming signs, less equity pressure, signs of stabilisation.

Sales Dynamics: More listings, slower sale times (median 50 days), buyers active; sellers should prepare early.

Regulation: Capital rules under reviewMore lenders — and potentially sharper rates — could emerge soon.

Key Dates to Watch

• 11 September – August REINZ housing market data

• 18 September – Next Official Cash Rate (OCR) review (RBNZ)

• 18 October – Q3 Consumer Price Index (CPI) inflation release

• Late 2025 – Final decision on capital requirement reforms

What’s Not in the Headlines

1. Mortgage Arrears Still Contained — For Now
Despite tighter household budgets, most borrowers are keeping up with repayments. Data from the RBNZ shows mortgage arrears remain low by historical standards, but worth watching if unemployment ticks up.

2. Building Consents Trending Down
New dwelling consents dropped again in July, suggesting a future undersupply risk — especially in growth regions like Waikato and Canterbury. This may support house prices over the medium term.

3. Regional Resilience
While national prices are still soft, regions like Otago and Taranaki have shown month-on-month value lifts in the CoreLogic index — an early sign some local markets may have turned a corner.

Deeper Reads

RBNZ Cuts OCR to 3.00% in August Review
The central bank delivers a widely expected cut, citing easing inflation and sluggish growth.
Read the RBNZ release

CoreLogic: House Price Declines Slowing
CoreLogic’s August data shows a sixth straight monthly fall, but the pace of decline is easing — a possible signal of market stabilisation.
See the CoreLogic report

REINZ July Market Update: Buyers Back, Sellers Hesitate
Sales volumes rise compared to 2024, but listings tighten. Median days to sell climbs to 50.
Explore the REINZ release

Capital Reform on the Table: What It Means for Lending
The RBNZ’s proposed capital requirement changes could reshape the mortgage lending landscape by increasing competition.
Read the Reuters coverage

ASB: One More Cut Likely Before Year-End
ASB economists expect one more OCR cut in 2025 — suggesting interest rate support will continue into summer.
See the ASB economic note