BUSINESS RELIEF AS INTEREST RATES EASE

On Wednesday 20 August 2025 the Reserve Bank of New Zealand cut the Official Cash Rate by 25 basis points to 3%, signalling that further cuts of up to 50 basis points are anticipated by March 2026.

Westpac immediately followed suit, reducing interest rates to a consistent offer of 4.75% per annum across their one-year, 18-month and two-year home loan terms.

Westpac NZ’s managing director of product, sustainability and marketing, Sarah Hearn, said yesterday: “We know cost pressures continue to weigh on many households and businesses, and we’re acting swiftly to pass on lower rates for borrowers."

This will be welcome news indeed for many small business owners and those looking to buy a business, as the rate reductions help to offset recent falls in the housing market. Although the equity in a home that may be required for loan security has fallen, the latest interest rate drop increases the amount banks will calculate a business can sustain in loan repayments.

Term deposit rates are also being trimmed back by the banks, so with the Government's new Investment Boost tax incentive added to the equation, along with expected lifts in consumer spending, the time is ripe for businesses to consider reinvestment, or for buyers to commit to new business purchases.

Westpac's Sarah Hearn also pointed out that, "While we know families and businesses are still feeling the effects of high living costs and economic uncertainty, we expect cost pressures to ease over the rest of the year."

And backing that expectation of better times to come, the Reserve Bank's chief economist Paul Conway reiterated yesterday that the Reserve Bank is responsible for maintaining price stability, predicting annual consumption growth will increase to almost 3% in 2026, with quarterly GDP growth growing to 0.3% in the September quarter, and continuing to rise through 2026.

“Monetary policy is working,” he said, “It’s affecting mortgage rates and deposit rates, and it is showing up on the real side.”