NEARING THE END OF THE CYCLE
For four consecutive quarters, the proportion of Kiwis expecting further rate cuts has eased. A net 36 per cent still anticipate lower interest rates in the year ahead – down from nearly half of all respondents last quarter – but sentiment has moderated as the Reserve Bank( RBNZ) nears the end of its current easing cycle.
The August OCR cut to three per cent was significant, and further reductions are expected, with ASB forecasting the cash rate could fall to 2.50 per cent by year-end.
Despite this, the message is clear: the steepest falls are likely behind us.
For borrowers, this means the cost of finance will continue to improve, but not indefinitely. Buyers who act while rates are still easing can secure an advantage, while sellers stand to benefit from the incremental boost to demand that falling rates bring.
LABOUR MARKET SHADOWS
If lower interest rates are the tailwind, the labour market is a headwind.
Rising job insecurity, subdued wage growth, and softer business confidence are tempering the impact of monetary policy.
In the report, ASB economists note that economic recovery has stalled more than previously anticipated, with tariff tensions and global complexities adding further pressure.
For buyers, this uncertainty feeds caution: households are more inclined to wait and see, even when affordability metrics improve. For sellers, it highlights the need to recognise who is most active in the market now – first home buyers with low equity loans are smaller investors chasing yield, rather than stretched owner-occupiers.
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