Homeowner stress

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The latest data reveals that mortgage delinquencies have soared to 1.3%, reaching the highest level seen since March 2020. This indicates that approximately 19,500 accounts are now past due.

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Additionally, new mortgage lending has plummeted by 27% year-on-year, signifying a downturn in the housing market. Many homeowners who purchased properties during the Covid-19 pandemic now find themselves in a situation where they need to refix their loans, resulting in relatively high interest rates compared to previous levels.

The heightened interest rates have instilled nervousness among individuals. “I have friends who are understandably worried as their mortgage renewal is due in the next month or so. No one is looking forward to it,” expressed a woman in an interview with 1News. Another woman stated, “We are contemplating returning to Switzerland because mortgages and everything here have become too expensive.”

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Mortgage advisor Dawn Whiteside acknowledges the apprehension, stating, “I imagine there are quite a few people out there who are feeling quite nervous. These interest rates are likely the highest we’ve seen in several years.”

Centrix, a data firm, confirms that more individuals are struggling to meet mortgage repayments, with 11.5% of mortgages in arrears. ASB recently raised its 12-month fixed rate to 7.25%, acknowledging the challenges posed by rising rates and expressing its proactive engagement with customers to offer guidance.

Centrix’s managing director, Keith McLaughlin, expresses concern about personal loans, particularly for those seeking short-term borrowing to bridge the gap between their financial commitments and available funds. He finds this trend the most worrisome.

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While high-interest rates help control inflation, they are proving challenging for many New Zealanders. A positive aspect is the relatively low unemployment rate, which provides employed individuals with an opportunity to renegotiate debts and navigate difficult times.

Whiteside advises against ignoring financial difficulties, emphasizing the importance of seeking assistance and exploring available options. She highlights, “The most crucial point is not to ignore the situation. If you are struggling, talk to somebody because there are solutions available to you.”

McLaughlin anticipates some relief later in the year, stating, “By the end of October, we may begin to witness a settling down of the situation, where there is increased confidence in interest rate stability.”

The Reserve Bank is scheduled to make another decision on interest rates next week.


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