When the official cash rate (OCR) drops, it often sounds like good news for everyone, but the real impact depends on whether you’re borrowing or saving.

The Reserve Bank recently lowered the OCR to 2.5%, and some economists think it could drop further to 2% to boost the economy. That’s positive for anyone with a mortgage, but less helpful for people relying on term deposits for income.

Here’s what it means for both groups and how you can make the most of the shift.

If you have a mortgage

Lower rates mean smaller repayments, but keeping your repayments the same when rates fall is one of the smartest financial moves you can make.

By maintaining your current repayment amount, you’ll pay off more of your loan principal each month and reduce your interest costs long-term. Fixing your mortgage at the new lower rate while keeping your payments steady can shorten your loan term by years, with little impact on your weekly budget.

If you rely on term deposits

Falling interest rates can be frustrating for savers. While term deposits provide security, they generally don’t deliver enough growth to keep up with inflation.

If you’re relying on term deposits for income, now’s a good time to review your strategy. Consider whether a mix of investments might better balance stability and growth. It’s not about taking unnecessary risk; it’s about understanding your risk tolerance and ensuring your money continues to work for you over time.

Why this is a good time for a financial review

When interest rates move, it’s a natural checkpoint to step back and look at the bigger picture.

Ask yourself:

• Are your investments still aligned with your goals?

• Is your mortgage structured in a way that works for you?

• Do you understand how much risk you’re comfortable taking?

A financial adviser can help you review your position and make sense of the options in plain English. At DecisionMakers, we start by understanding where you are right now, then build a plan around what matters most to you — whether that’s family, community, or long-term freedom.

The bottom line

Interest rate changes are part of the economic cycle, but how you respond to them can make a real difference.

Keeping your repayments steady, diversifying your savings, or reassessing your investment mix are small adjustments that can have a big long-term impact.

If you’d like to talk about what the latest OCR drop means for you, your first session with us is always free.