April 2025 update | OCR cut, lending shifts & fresh optimism in the market

The Reserve Bank’s recent decision to cut the Official Cash Rate by 0.25% to 3.5% came as welcome news for borrowers - and a sign that the tide may be turning.

Economists have responded positively, with many now predicting deeper cuts ahead than originally forecast. Factors like easing inflation, a slowing global economy, and recent US trade tariff moves are all feeding into those expectations.

While the bigger drop in 2–3 year fixed rates may take a little longer to flow through, we’ve already seen some movement. Floating rates have come down immediately, and we’ve had one bank drop its test rate to 6.75% - the lowest we’ve seen in a long time, and a significant drop from the 9%+ levels a year ago.

We expect more downward shifts in the coming weeks, especially as we get closer to the next OCR review in late May.

We’re also seeing optimism return to the market. Many clients are coming off fixed or floating rates above 6.5% and are now refixing in the sub 5s. That frees up cash, boosts household confidence, and is already starting to flow through to spending.

New Builds: Time to Take a Fresh Look

At Colab, we’ve always had a strong focus on new builds. Why? Because we know the value they can offer, especially in today’s market.

New builds are exempt from Reserve Bank LVR restrictions and the new DTI rules coming in this year. That means less deposit required and more borrowing power. They also often come with tax benefits, lower maintenance, and fixed-price contracts that give buyers more certainty.

As test rates drop and debt-to-income limits start to bite, we expect new builds to become even more attractive - particularly for first home buyers and investors who want to maximise their lending potential.

And because we work with all the major banks and dozens of non-bank lenders, we can help you structure your lending in a way that makes the most of these advantages.

Behind The Scenes: How We’ve Been Helping Clients With Tricky Deals

While our TurnKey Pro product focuses on standalone residential builds, our wider non-bank network allows us to fund much more complex deals too.

This month, we’re settling:

• A land subdivision in the Bay of Plenty, to fund civil construction costs, with development funding to be applied for once building consents are approved.

• A multi-unit development that required a bespoke funding structure, with funding released in three tranches across the construction timeline.

These types of deals require deep experience and strong lender relationships - which is exactly what we bring to the table.

Additionally, if you're a builder and you'd like to find out more about how we're helping home builders scale through our market leading TurnKey Pro product, hit the button below.

One Final Thought: Not All New Builds Are Created Equal

There’s a lot of new build stock on the market at the moment - and let’s be honest, not all of it is great.

The good news is that many of the better-quality developers are still seeing strong activity. We work with a number of excellent builders delivering well-designed homes in communities that are built to last - like Fletcher Living and others who focus on thoughtful masterplanning, durability, and better design outcomes.

At Colab, we do our best to support our developer clients with advice on how to stand out in a crowded market. That could be through better design, Homestar-rated homes, or offering layouts that genuinely meet the needs of today’s buyers. With an oversupply of generic two-bedroom townhouses and homes with limited parking, we believe that squeezing as many units onto a site as possible isn’t always the best model.

Developers who build quality, and think long-term, will always outperform. And buyers are becoming more selective - they’re visiting sites, asking questions, and comparing quality.

We’re also seeing more people push back on property investment firms that promote new builds purely on yield. If you’re investing, go and see the home. Walk the street. Ask who built it.

At Colab, we’re here to give independent, transparent advice that’s in your best interest - not someone else’s sales agenda.

Whether you’re a first home buyer, an investor, or building your dream home, we’d love to help.