New Zealand’s OCR has dropped to 3%!

The Reserve Bank’s decision to lower the Official Cash Rate (OCR) to 3% offers much-needed relief for households and businesses. A reduced interest rate can help ease everyday living costs, lower borrowing expenses, and stimulate economic activity, giving families and companies more breathing room as they navigate ongoing financial pressures.

This move comes at a time when the labour market is under strain. Unemployment rose to 5.2% in the June 2025 quarter, up from 5.1% earlier this year and 4.7% a year ago – the highest level since September 2020.

Broader underutilisation, which includes underemployment as well as unemployment, also increased to 12.8%, signalling continued slack in the job market.

What this could mean for you? 

If you’re a homeowner on a fixed-rate home loan, or managing personal loans or credit card debt, this could be a great time to explore refinancing. A lower interest rate might reduce your repayments, giving your monthly budget a welcome boost.

You might find yourself with extra money in your pocket, so where could it go? 

• Increase your loan repayments and pay off your home loan faster 

• Consolidate your debts into one loan with a lower interest rate 

• Invest in other assets to grow your financial future 

Our advisers can help you make sense of your options and find the right strategy for your goals. 

With rates potentially nearing the bottom of the current cutting cycle, now may be a smart time to fix your home loan for the longer term. While waiting for even lower short-term rates might seem tempting, locking in a competitive rate now could give you peace of mind if the market starts to shift. 

Curious about what a new rate might look like? Run your numbers online with our Loan Repayment Calculator.

 Thinking about investing in property? 

Lower rates can make borrowing more affordable, which may be the perfect opportunity to leverage your equity. Combined with steady property market activity, more listings on the market, and lower borrowing costs, these conditions could help offset some of the effects of higher unemployment. Now could be the time to reassess your financial position and consider growing your property portfolio. Explore your investment property options before the market shifts again.

If you’re saving 

You might also consider investing in shares, bonds, or contributing more to your KiwiSaver, along with other assets that could offer stronger long-term returns than savings accounts, which are likely to deliver lower interest following today’s announcement.

What is the OCR? 

The Official Cash Rate (OCR) is set by the Reserve Bank of New Zealand and acts as a benchmark for interest rates across the country. When the OCR drops, borrowing usually becomes cheaper, affecting home loans, savings, and overall economic activity. It’s one of the main tools the RBNZ uses to control inflation and support economic stability. 

Want to dive deeper? Visit the Reserve Bank of New Zealand’s website for more info.