Household financial stress likely to grow: RBNZ

It expects the effective mortgage rate, the average rate paid across all mortgages, will reach 6.4% by mid-2024, up from the low at 2.9% in late 2021, RBNZ says in its latest financial stability report.

“The average share of their disposable income going to interest payments is expected to rise from a low of 9% in 2021 to around 18% by the middle of 2024,” it says.

This is still well below previous periods of financial stress, such as in the late 2000s.

But “the adjustment to higher interest rates is likely to be felt more strongly by certain cohorts of borrowers.”