Anticipation of November Rate Cuts Drives Record Short-Term Mortgage Borrowing

Borrowers increasingly opted for six-month fixed-term mortgages in May, expecting interest rate cuts by November. Most banks predict the Reserve Bank will lower the OCR later this year due to economic slowdown, rising unemployment, and inflation returning to the 1-3% target range. Data reveals owner-occupier mortgages on six-month terms surged to 17.1%, up from 3.4% last year, reflecting expectations of imminent rate drops. Investor borrowing on six-month terms also rose to 21.7% from 18.7% in April. Despite this, the one-year fixed term remains the most popular, although it saw a slight decline. Total mortgage lending increased to $7.1 billion in May, with owner-occupier loans reaching $5.2 billion and investor lending at $1.8 billion.

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