Mortgage delinquencies are up to 1.3%, which is the highest level since March 2020, meaning around 19,500 accounts are past due.
New mortgage lending is also down 27% year-on-year as the housing market takes a downturn.
A number of homeowners who bought during Covid will now have to re-fix their loans, putting interest rates relatively high compared to where they were.
The higher interest rates are making some people nervous.
“I’ve got friends who are obviously they’re a bit worried ’cause they’re coming up in the next month or so. No one’s looking forward to it,” one woman told 1News.
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“We are considering going back to Switzerland because mortgages and everything is just too high,” another woman said.
Mortgage advisor Dawn Whiteside says this reaction is understandable.
“I would imagine as well that there’s going to be quite a few people that are quite nervous out there,” she told 1News.
“These are probably the highest interest rates that we’ve seen for a number of years.”
Data firm Centrix said its latest figures confirm more are struggling to pay mortgages.
They’re also climbing — with 11.5% of mortgages in arrears.
ASB has just hiked its 12-month fixed rate to 7.25%. The bank said it’s held fixed rates for two years.
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It acknowledges the challenges of rising rates, particularly with the cost of living. It also said it’s “proactively engaging with customers to provide advice”.
Centrix said New Zealand has an economy of two halves, with some people fine and others struggling.
Personal loans are also a big worry.
“That tends to be people who are looking for short-term borrowing to try and bridge the gap between what they need in their bank account to meet their commitments for what they actually have,” Centrix managing director Keith McLaughlin said.
“So that’s the one I find the most disturbing.”
High-interest rates do help to keep inflation under control, but they’re also making it tough for many New Zealanders.
One silver lining is that unemployment is relatively low, so people with jobs have a good chance to renegotiate debt and manage tough times.
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“The really, really big main point is don’t bury your head in the sand. If you’re struggling, talk to somebody because there are options out there for you,” Whiteside said.
McLaughlin sees things easing later on in the year.
“I would’ve hoped at the end of October we may start to see things settle down where there is more confidence that there’s stability in interest rates.”
The Reserve Bank will make another call on interest rates next week.
Source: 1news.co.nz