Market Update 19 Aug 2025: OCR Cut Incoming: Who Wins, Who Loses, and What You Should Do
- Ryan Smith
- 5 days ago
- 4 min read
Giving you exclusive insights into the New Zealand property market and keeping you updated with the latest in property investment concepts.
Property market update for August 19, 2025.
The Reserve Bank is expected to cut the Official Cash Rate (OCR) this week. But what does that mean for your wallet?
Whether you're a homeowner, investor, or saver, this shift could reshape your financial strategy.
Why the OCR Matters
The Official Cash Rate (OCR) is the Reserve Bank’s primary tool for influencing interest rates across the economy.
When the OCR drops, banks typically respond by lowering the rates they charge on mortgages and the rates they offer on savings accounts.
Floating mortgage rates tend to move in close alignment with the OCR. While not a one-to-one relationship, historical data shows a strong correlation, making the OCR a reliable indicator of where floating rates are headed.
This week, economists widely expect the OCR to fall from 3.25% to 3.00% in response to sluggish economic growth and easing inflation pressures.
Case Study: How a 0.25% Rate Cut Impacts Homeowners and Savers
Let’s look at a real-world example to understand the impact.
Meet Sarah:
Christchurch homeowner
$600,000 mortgage on a floating rate of 6.79%
$50,000 in a term deposit earning 5.25%
If the OCR cut goes ahead as forecast, and her bank passes on the full 0.25% OCR cut, her mortgage rate could drop to 6.54%.
That would reduce her monthly repayments from $3,908 to $3,808 - a saving of $100/month, or $1,200/year.
That $1,200/year is great for covering bills and freeing up cashflow in the property. As interest rates continue to drop, Sarah's cashflow will continue to improve.
But there’s a flip side.
If her term deposit rate drops to 5.00%, she’ll lose $125 in annual interest. For many Kiwis, this is the trade-off: lower borrowing costs vs. weaker savings returns.
Who Benefits from Lower Interest Rates?
1. Homeowners on Floating Rates
Floating-rate borrowers see immediate relief when rates drop. Lower repayments free up cash flow for other expenses or investments.
2. Property Buyers
Cheaper borrowing can boost buyer demand, especially in the new-build sector. This can support property prices and improve affordability.
3. Share Market Investors
As savings returns decline, investors often rotate into equities seeking better yield. This can lift share prices and improve dividend appeal.
4. Bond Holders
Existing fixed-income assets with higher coupons may gain value as new bonds offer lower yields.
Who Might Lose Out?
1. Savers and Term Deposit Holders
Lower interest rates mean lower returns on cash holdings. Term deposits, notice savers, and high-interest accounts may all see rate cuts.
2. NZD-Based Investors
Rate cuts often weaken the New Zealand dollar. This can impact offshore investments, FX costs, and imported goods pricing.
What Should You Do?
Whether you're a borrower, saver, or investor, falling interest rates shift the financial landscape. Here’s how to respond:
Homeowners: Consider refinancing or locking in a lower fixed rate before further cuts
Investors: Reassess your asset allocation. Lower rates may favour growth assets like shares and property
Savers: Explore alternatives to term deposits, such as diversified portfolios or income-generating investments
Final Thoughts
Interest rate changes aren’t just for economists; they affect every Kiwi household.
Whether you're looking to save, invest, or buy property, understanding the OCR’s impact can help you make smarter financial decisions.
At Thrive Investment Partners, we’re here to help you navigate these shifts with confidence. Reach out for tailored advice, or explore our resources to stay informed.
How Can We Help You?
We help Kiwis build wealth through property investment. Our advisors will take the time to understand your individual needs and recommend suitable investment properties to help you build wealth and set up your retirement.
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We use a 3-step process:
We start with a Discovery Meeting where we learn about you, your goals, etc., and you learn more about us.
This is followed by a Strategy Meeting where we model your retirement plan, understand key investment concepts, and briefly touch on some investment choices.
Finally, an Asset Selection Meeting where we discuss investment options in more detail and make any recommended adjustments based on what we now know about you.
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What Do We Do, And What Don't We Do?
What We Do
We offer end-to-end New Zealand property investment advice, helping Kiwi investors grow wealth through smart, data-led decisions. Our focus is on quality new builds in strong locations, tailored to your goals, guided by a team that knows the NZ market inside out. What We Don’t Do
We don’t do KiwiSaver, shares, cryptocurrency, or broad financial planning. Thrive is not a generalist firm. We specialise in property investment in New Zealand because that’s where we deliver the most value. By staying focused, we cut through the noise and help our clients make confident, well-informed property investment decisions.
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