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• The Reserve Bank makes its latest OCR decision tomorrow at 2pm. 
• A 25-basis-point cut to the OCR is widely expected. 
• BNZ has the lowest fixed mortgage rate among major banks at 4.89%. 

BNZ has cut fixed and floating mortgage rates ahead of tomorrow’s Official Cash Rate (OCR) decision. 

BNZ now has the lowest fixed rate among the major banks after its 18-month offering fell to 4.89%, effective today. 

Its six-month fixed home loan rate was cut by 14-basis-points (bps) to 5.35%. 

BNZ’s one-year rate will drop from 4.99% to 4.95%. 

The largest cut was to its four-year term, which fell 30bps to 5.39%. 

BNZ was also dropping its standard variable rate from 6.69% to 6.44%. 

James Leydon, BNZ general manager home lending, said the bank was confident to pass on savings to home owners with the Reserve Bank widely expected to cut the OCR tomorrow. 

“We know many of our customers are looking beyond the very short-term fixed rates as the interest rate environment evolves. 

“By cutting our fixed rates across all terms, we’re giving customers more choice and the ability to lock in a competitive rate for a longer period. 

“Lower interest rates should also help relieve some pressure on household budgets by making borrowing more affordable.” 

Leydon said they were starting to see the impact of lower interest rates with increasing activity in the housing market. 

“The number of customers applying for home loans with BNZ in the six months to April 2025 has increased 20% compared to the same time last year.” 

BNZ said it was also opening all its branches five days a week to accommodate customer needs. 

Significant economic uncertainty 

Financial markets and economists have priced in another 25 bps cut to the OCR tomorrow, which would take it to 3.25%. 

So far 200 bps have been cut from the OCR since August last year. 

“There is always significant uncertainty about the economic outlook and the corresponding appropriate monetary policy. But rarely is there the sort of uncertainty we are experiencing now, thanks largely to Donald Trump’s tariff policy gyrations,” BNZ head of research Stephen Toplis told the Herald earlier this week. 

Forecasts for the OCR have shifted in recent months with a low point of 2.75% or 2.5% by the end of the year, compared with the previously expected 3% by the end of the year. 

“We, and the Reserve Bank, follow the BNZ-Business NZ PMI and PSI closely for indications of the current state of the economy,” Toplis said. 

“Unfortunately, these indicators, when combined, suggest that the acceleration in growth that we had bargained on starting soon may be under threat.”