New Zealand’s OCR has dropped to 2.25%!

The OCR has dropped to 2.25%: What this means for you heading into Christmas

A new OCR cut as the year wraps up

The Reserve Bank has announced a drop to the Official Cash Rate, now sitting at 2.25%.

This move lands at a critical time, with banks already competing aggressively for lending before the pre-Christmas close-down period.

With Dr Anna Breman due to step in as Governor on 1 December, the market is expecting further shifts in tone over the coming months, so this latest cut is one to pay attention to.

Refinancing, cashbacks and the strongest competition we’ve seen all year

Our advisers say the current lending environment feels like a “perfect storm of opportunity” for many clients.

Here’s why:

Cashback offers are at some of the highest levels in years

Banks are offering up to 1.5% cashback, with clients receiving anywhere from $1,500 to $30,000, depending on their lending. Some lenders are even offering cashback on loan amounts as low as $100,000, widening the opportunity for more homeowners.

Banks are competing hard before Christmas

Advisers describe the environment as the most aggressive they’ve seen in years.
BDMs are using discretion, matching deals and honouring previously documented terms in some cases.

Cut-off dates are tight

Most lenders want applications documented by mid-December.
Some already have earlier cut-off dates, making the next few weeks crucial.

Serviceability test rates are dropping

Many banks have reduced their serviceability test rates, which means more clients are now able to borrow higher amounts than just a few months ago.
For home buyers, upgraders and investors, this is opening doors that were previously out of reach.

The Great Refix: Why acting early matters

The Great Refix continues as thousands of Kiwis roll off older, higher rates into a shifting interest rate environment.

Acting before your rate expires can help you:

• Avoid being rolled to less competitive default rates
• Secure cashback while offers are still active
• Restructure lending at lower test rates
• Take advantage of fixed rates under 5% currently available at some banks

Advisers are seeing strong demand from clients wanting to move early to capture value before offers disappear for the year.

For borrowers: What the drop to 2.25% means

• Lower potential repayments if refixing or refinancing
• A stronger negotiating position with multiple banks competing at once
• More flexibility across structures, including long-term fixed rates gaining popularity again
• Opportunity to consolidate debts under improved interest conditions
• Ability to borrow more, thanks to reduced lender test rates

For investors and future buyers

Lower borrowing costs can open the door to:

• Expanding a property portfolio
• Improving long-term rental cash flow
• Securing stronger lending conditions before 2026 settles in

With listings up in many regions, early movers may gain a pricing advantage if demand increases again – especially since dropping test rates mean more investors now qualify for the lending they previously couldn’t secure.

For savers and KiwiSaver members

A lower OCR often leads to:

• Reduced deposit and savings interest
• A need to review your long-term investment mix
• More compelling opportunities in diversified funds

Our advisers can help you review your KiwiSaver or broader investment strategy to ensure your money keeps working effectively.

What to do next

With deadlines approaching and bank competition at its peak, now is an excellent time to:

• Check your home loan expiry date
• Review cashback offers available for your situation
• Compare lender options before the holiday slowdown
• Talk to an Apex Advice adviser for personalised guidance

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.