Homeowners and prospective first-home buyers are thrilled about the drop in the interest rate.
Reserve Bank Governor Graeme Wheeler made the announcement in Wellington this morning (file photo) Photo: RNZ / Diego Opatowski
Banks rushed to slash their mortgage rates after the Reserve Bank cut the Official Cash Rate (OCR) for the first time in more than four years, to 3.25 percent.
Home loan rates began to fall and the dollar dropped swiftly after this morning's announcement.
Listen to Checkpoint's lead story on today's announcement
Photo: 123RF
The movements in the property market have been the talk of the Wellington IT recruitment office where Steve Zawodny works.
"A couple of girls in the office are looking to buy a house and we said, now's the time to look at it. And myself and my wife - we rent - we've rented for a long time and are looking to buy a house in the next 12 months or so," he said.
"As long as they can make it easy to put a deposit down, all good news for us."
Matthew Ruscoe's children have all moved out, but he and his wife still have a mortgage to pay off.
With ANZ, ASB, Co-operative Bank, and Kiwibank all dropping their floating mortgage rates today, he said he was quids in.
"We have a reasonable sized mortgage - it's good news - you might look to refinance again," he said.
"Anything which is going to help the bottom line at the end of the week is going to help."
Susan Hurley has just had to take out a mortgage after moving house to Upper Hutt.
"I still have a mortgage so therefore it would be quite a bit of saving on that," she said.
"I don't have any savings so that's not going to affect me that way, so that's a good thing, but how long it will last - who knows?"
Photo: RNZ / Diego Opatowski
Floating home rates could drop further
ASB said anyone with a mortgage of about $250,000 over 25 years would save about $40 a month on their repayments.
Mortgage broker Bruce Patten said he was advising people to be patient, as floating home loan rates could go even lower.
He said there was a good chance the rates from six months to five years could all come under the 5 percent mark - something not seen in decades.
But, with tighter lending restrictions on investors in Auckland - aimed at cooling the rampant market there - coming into effect in October, there is a time limit.
Listen to Bruce Patten
In the capital, for government worker Mel Smalley, who has a fair amount of money squirrelled away, the drop in rates will have a noticeable negative impact.
"Money I have in the bank, if the rate comes down I get paid less interest on my savings," he said.
"It's something we certainly need to be aware of."