There are emerging positive influences on our economic environment to look forward to:

• There has been a significant decline in interest rates since this time in 2024. With an OCR review scheduled for February, and with many economists predicting a 50 basis points cut, that would result in a decrease in short term interest rates for both mortgage and business borrowers. What is less clear is how much other fixed rates will fall. International factors, such as a relatively strong US economy, are reducing the likelihood that fixed rates longer than 2 years will fall materially over 2025.
  
• Further interest rate decreases should improve consumer discretionary spending and improve the business case for capital investment in the business sector.
  
• Improving commodity prices for some key export markets, particularly dairy, will improve confidence in key sectors of our primary industry.
  
• Strong competition for business between lenders. We continue to see strong competition across our panel of funders for our clients' business, provided the credit quality fundamentals are strong enough. This helps our team to achieve positive and efficient funding outcomes for our clients.
  
• Residential construction costs have stabilised with the national average cost to build a ‘standard’ single storey three bedroom, two-bathroom standalone dwelling increasing by only 0.6% in the three months to December. This is half the 1.1% growth seen in the third quarter of 2024 and also below the long-term average quarterly rise of 1.0%. With downward pressure on interest rates, we should see an increase in confidence in this sector.

No matter what your finance needs are for 2025, we look forward to hearing your business goals and working with you as your dedicated finance partner to make 2025 successful.