OCR forecast: Has ANZ lost the plot?

ANZ has a thirst for headlines at the moment.

Two weeks ago, they predicted the OCR would go up, reaching 6%. This week, they said that the OCR could hit 7%.

It seems like Stuff only looks at ANZ's OCR announcements. Those are the ones that make click-worthy headlines. Journalists have largely ignored other forecasts that should make property investors more confident.

If you believe their OCR forecasts, you must accept their other forecasts, too.

In the same report where ANZ said the OCR would go up, they released a new mortgage interest rate forecast.

This showed they expect mortgage interest rates to be slightly higher over the next 9 months. But, they think they will fall faster as we move in next year.

Last month, they thought the 1-year interest rate would fall to 5.9% in 2025. Now, they say it will be up to 0.6% lower.

They think the 1-year rate could hit 5.3% before the end of 2025.

On a $500,000 mortgage, you could save an extra $58 a week compared to ANZ’s previous forecasts.

In fact, over the last few months, ANZ has continually lowered its interest rate forecasts. That means they think interest rates will come down faster than they did 1-6 months ago.

How could that happen when ANZ thinks the OCR will go up?

If the OCR goes up, inflation should come down faster. ANZ economists say this would be “paving the way for cuts in 2025.­­­­”

So, the bank thinks the OCR will go up over the next quarter. But they also forecast that mortgage interest rates will fall throughout 2024.

And it's the mortgage interest rates you really care about.

ANZ's recent forecasts shouldn't scare you. They should make you feel like things are moving in the right direction. And it’s not just interest rates helping property investors.

In the same report, they revised their house price forecast. They now think house prices will go up a little faster than they thought in December.

Late last year, ANZ said house prices would increase by 2% in 2024.

Now, they say house prices will go up 3% over that same timeframe.

Even though the banks think the OCR will go up, they also think house prices will go up and interest rates will fall.

You’ve also got to remember that ANZ's forecasts are controversial. They are the only bank that thinks the OCR will go up.

BNZ, KiwiBank, ASB and Westpac all think the OCR will stay the same.

The main takeaway is that you shouldn’t react emotionally to a news headline.

When you dig deeper, you might find that the news is better than the headline suggests.

Even better, go to the source material. Read the report and see what the ANZ (or any bank) really thinks.

Because things will likely get better (not worse) for borrowers.

And no, ANZ hasn’t lost the plot. Sometimes, journalists write clickbait headlines – just like I’ve done for this article.