PHOTO: CoreLogic chief property economist Kelvin Davidson
A leading economist is warning the worst could be yet to come for many homeowners who are about to refix their mortgage rate.
In March last year, the average 5-year mortgage rate being taken out by borrowers was 3.78 percent – which has risen to 5.47 percent as of February 2022.
The median house price in Auckland was down 3.3 percent in April, reflecting rising interest rates, new figures from Barfoot & Thompson show.
CoreLogic chief property economist Kelvin Davidson told AM on Monday rising mortgage rates have a “lagged effect” as some homeowners are still yet to refix.
“I think it’s fairly clear out there, we are seeing prices fall now and a lot of that is to do with rising mortgage rates,” Davidson told AM Early host Bernadine Oliver-Kerby.
“The thing about rising mortgage rates is they do have a lagged effect. We know there are about half of loans still fixed in New Zealand and yet to refinance in this cycle.”
Davidson warned we haven’t seen the “worst of it yet.”
“Yes, there will be people who have already rolled over and have faced up to those higher rates, but for a lot of people it’s still yet to come,” he said.
“It’s a lagged effect, so we probably haven’t even seen the worst of it yet.”
When homeowners do refix at the higher rates, it will be another cost they have to face in the middle of a cost of living crisis.
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