According to the Genworth Financial Mortgage Trends Report, some 77 per cent of homeowners in New Zealand are expected to meet increased interest rate as mortgages to re fix.
According to this report, about one third of those with rates that have been fixed but are due to adjust are currently paying just 7 per cent in interest. When adjusted, variable rates may move between 10 per cent and 10.55 per cent. This considerable rise could have a negative effect on home buyers.
As reported by the New Zealand Herald, Peter Hall, who is county executive and director for Genworth Financial Australian and New Zealand, "A jump of three percentage points in a mortgage rate can be more than enough to tip a borrower into arrears and possibly default, and this should be a serious consideration for the home lending market."
There are many homeowners here that may be hard pressed to afford such an incredible rise in their payments. More so, selling property in New Zealand has become more difficult as house prices rise to significant highs.
According to reports like the Fairfax Media Home Loan Affordability report, the monthly home mortgage payment takes up to 82 per cent of the average income here. This is a considerably high percentage for any area.
Home affordability in New Zealand is at a record low, with fewer new home buyers able to purchase properties in many of the country's largest cities.
