Today,The Reserve Bank has hiked the official cash rate by 0.25 per cent to 0.75 per !
* What is OCR?
The Official Cash Rate (OCR) is an interest rate set by the Reserve Bank. It influences all other interest rates and is, in effect, the wholesale price of borrowing or lending money in New Zealand. It allows the Reserve Bank to meet its primary goal of ensuring price stability for New Zealand.
* How does it affect us?
The Reserve Bank adjusts the OCR in order to keep inflation between 1 and 3%. Inflation is the rise of average prices across the economy. In order to curb inflation and keep the economy on an even keel, the OCR rate is a crucial factor.
By increasing the OCR, people are encouraged to save rather than spend as they can expect good returns on the money they invest. With spending reduced, the economy slows and so to does inflation.
Lowering the OCR has the opposite effect. Interest rates on savings are poor so people are less likely to spend. But with credit and loans cheaper, spending is higher, and the economy receives a boost.
For the Real Estate market, a higher OCR may have two main effects: 1. Because of higher interest rates, real estate investors will hoard fewer properties. 2. The increase in the developer’s capital cost may also lead to a moderate increase in real estate prices.
Your Realtor Friend
Roman Hu
021590027
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