LJ Hooker Group Reacts to US Fed Cut and GDP Figures

LJ Hooker Group Head of Network NZ Campbell Dunoon

"The recent drop in interest rates by the Federal Reserve in the United States, coupled with the latest local economic data, signals a road for further relief for homeowners and prospective buyers, as it could lead to more favourable borrowing conditions.

“While the US Federal Reserve make decisions for its own economy, it is bound to have a ripple effect on our own financial landscape here in New Zealand. Global markets are interconnected, and a move like this from the Federal Reserve often sets the tone for central banks worldwide, including the Reserve Bank of New Zealand (RBNZ).

“The cut in the US means downward pressure on local interest rates as international lending conditions ease, which will reduce borrowing costs for local banks. These cuts can be passed on to borrowers, which is why we have already seen banks reduce fixed term interest rates on mortgages.

“The RBNZ have its next announcement on the official cash rate (OCR) on 9 October, and the June 2024 quarter GDP figures released today by Stats NZ will influence the Monetary Policy Committee’s decision. With further constraint in the economy, it likely means inflation continues to come within the banks target range, increase the chances for a further OCR cut next month.

“Since the OCR reduction in August, we have seen a flurry of activity in the property market. Realestate.co.nz saw an increase of 8.5 percent in listing in listing enquiries following the decision. Our network is also seeing increased engagement and more enquires, particularly in regions where affordability is less of a concern, such as parts of the South Island. It’s a reminder that while the market has challenges, there are still opportunities for those ready to act.

“As we look ahead, the next few months will be crucial for both the economy and the property market. If the Reserve Bank responds by adjusting the Official Cash Rate, we may see further relief in mortgage rates, providing a potential lift in demand for housing.

However, with economic indicators remaining soft, it’s clear that both buyers and sellers will need to remain cautious as the market adjusts to these changes.”LJ Hooker Group reacts to US Fed Cut and GDP figures