The big drop: How the record-low OCR will affect you

The Reserve Bank has cut the official cash rate (OCR) to 1.5 percent on Wednesday - and it could mean more pain at the pump.

Economists warn the record-low rate is bad news for motorists as the shift in the OCR is expected to lead to a drop in our dollar. Because far-flung New Zealand is so dependent on imports, our falling dollar means more expensive fuel.

"As the New Zealand dollar falls, it makes our imports more expensive," economist Shamubeel Eaqub told The AM Show last month.

But at the same time, exporters and home buyers stand to benefit.

The OCR helps banks set the rate of interest you have to pay on a mortgage - a lower rate means you pay less.

ANZ has already announced it will lower the interest rates on its floating and flexible home loans by 0.10 percent, and reduce its leading fixed-term rates 0.06 percent to 0.14 percent.

"The current extreme low interest rate environment not only represents an opportunity for new home buyers to enter the market, but for existing home loan customers to pay off as much of their debt as possible," says ANZ managing director Antonia Watson.

According to Lesley Harris, a spokesperson for The First Home Buyers Club, the change will take some pressure off home buyers, but it's unlikely to be life-changing.

"I think it could lessen the load by possibly $10 or $20 a week, as opposed to huge amounts of money," she says.

But there's bad news for savers and pensioners. Banks will decrease their interest rates on savings accounts too.

"It's important that people maintain healthy savings, but a lower cash rate will impact on deposit interest rates. We're concerned that savers might seek higher interest rates through riskier investments and savings options," Watson says.

"Lower deposit interest rates will also be a concern for the elderly who rely on interest income in retirement."