OCR at 15-year high spells more mortgage misery

The New Zealand National Party

The Reserve Bank’s decision today to hold the Official Cash Rate at a 15-year record high is bad news for Kiwi mortgage holders, National’s Finance spokesperson Nicola Willis says.

“The decision today to keep the OCR at 5.5 per cent means New Zealanders are going to be hammered by these sky-high interest rates for even longer. They are the innocent victims of Labour’s economic mismanagement and reckless spending.

“Labour chose to crank up spending even while inflation spiralled, leaving the Reserve Bank no choice but to hike interest rates faster than ever before. If re-elected Labour will do the same again.

“New Zealand mortgage holders simply can’t afford the re-election of a big-spending, big-taxing Labour-led Government, with Westpac warning today that: ‘we would assess the risk around the Labour Party’s fiscal plan as being skewed towards delivering a slightly weaker fiscal position compared to the right leaning parties.’

“Westpac then goes on to emphasise that, ‘It is also plausible that coalition negotiations with the Greens and Te Pāti Māori could also lead to more pressure on the fiscal outlook. This is because by ruling out the imposition of a wealth tax, the Labour Party has rejected the key revenue-raising initiative that the Greens and Te Pāti Māori parties have positioned to fund the significant new expenditures that each is seeking.’

“New Zealand mortgage holders should judge Labour on their track record of delivering record interest rate hikes:

  • The OCR is at its highest level in nearly 15 years, now higher than Australia, the United Kingdom, Canada, and the EU
  • The OCR has climbed to 5.5 per cent in less than two years – the fastest rate rise in New Zealand history.
  • The latest average special interest rate advertised by the banks on a two-year fixed mortgage on a residential property was 6.8 per cent. Two years ago, it was only 2.9 per cent.
  • This has led to fortnightly interest costs on a $500,000 mortgage going from $550 to $1,300 in that time. For many, that has pushed them over the edge and they are falling into arrears.

“The lasting legacy of this Labour Government will be the financial pain they have inflicted on New Zealanders with a mortgage, not to mention the anxiety and stress that comes with that.

“National has a plan to beat inflation and take pressure off interest rates. We would reduce costs on business, eliminate bottlenecks in the economy, restore the Reserve Bank’s focus on inflation, deliver tax relief, and restore fiscal discipline.

“National’s fiscal plan commits us to lower levels of spending than Labour, and our fully-funded tax plan will swap Government spending for tax relief which Treasury has noted leads to less pressure on inflation and interest rates.”

/Public Release. View in full here.