Expected rising interest rates to put more pressure on mortgage holders

The bank’s latest update on housing finances says this is likely to worsen over the next year as it expects the average mortgage rate to rise by a further 150 bps.

“Over the coming year about 50% of all mortgages will come up for repricing and will expose increasing numbers of borrowers to higher rates,” Satish Ranchhod, a Westpac senior economist says. 

The RBNZ estimates households with mortgages could see the share of their incomes spent on interest costs rising to more than 20% by the end of this year.

This comes at a time as wealth levels fell by $42 billion in the first three months of the year and have fallen 9% since the end of 2021. The decline is mainly due to the 17% fall in house prices since interest rates started rising in late 2021.