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The Reserve Bank today has confirmed that extensive pain is on the way for Kiwi mortgage holders, National’s Finance spokesperson Nicola Willis says.
The Financial Stability Report, released this morning by the Reserve Bank, expects that:
- “Among households with mortgages, the average percentage of disposable income dedicated to debt servicing is expected to rise from a recent low of 9 per cent to 20 per cent…”.
- “The number of households in financial difficulty will grow as more fixed-rate mortgages reprice, and could increase significantly if mortgage rates rise materially above the servicing assessment rates of around 6 per cent that banks applied through the pandemic period.”
- “First-home buyers are the most vulnerable as interest rates increase…”
- “A significant deterioration in labour market conditions remains a possibility, and would lead to further household debt servicing arrears and increase borrower defaults. This could contribute to fire-sale dynamics and accelerate a decline in house prices.”
“These findings are gravely concerning and portray a bleak future for Kiwi mortgage holders. I worry particularly about recent home buyers whose prospects look particularly grim,” Ms Willis says.
“New Zealand households are already facing a cost of living crisis and today’s report confirms it’s only going to get worse. While things are already financially tough, the future looks even tougher for many Kiwis.
“I feel for all those mortgage holders who will be kept up at night worrying about how they are going to make ends meet.
“It’s clear New Zealanders and their families are now paying a large price for the extensive money-printing, borrowing and spending under this Government.
“Labour’s economic mismanagement has worsened the cost of living crisis, with real wages declining, and petrol, food and mortgage costs all going through the roof.
“The need for strong, careful economic management and fiscal responsibility has never been more important. National would rein in wasteful spending, stop adding new costs and taxes, let Kiwis keep more of what they earn and deliver a real economic plan to tackle inflation and unleash enterprise.”
