The Reserve Bank has lifted the OCR by 50 basis points for the third time in a row to control inflation, scaring first-home buyers who may see their interest rate doubled.
Some home buyers are now looking at re-fixing their mortgage rates to avoid a more painful hike down the line after the Reserve Bank increased the Official Cash Rate (OCR) again.
Buying a home is notoriously out of reach for many Kiwis and with interest rates up again, the goal posts have moved once more.
"It will actually affect me quite a lot," one person said.
"Just have to be realistic about what you can buy," another said.
The Reserve Bank announced today that it had increased the OCR to 2.5 percent as "spending and investment demand continues to outstrip supply".
The central bank said it will "continue to lift the OCR" until inflation is within its target range of 1 to 3 percent - but inflation is currently at 6.9 percent.
"The most popular mortgage term is one year these days and it's now almost a year since the Reserve Bank started hiking interest rates and those mortgage rates started to move, so there wouldn't be too many borrowers now who haven't either already been affected or who are expecting to be," ANZ economist Sharon Zollner said.
One of them is 21-year-old Liam Patten who, like many first-home buyers, has never known an interest rate outside of 2 percent.
"At the moment my interest rate's fixed till next year at 2.95 percent so looking at a potential doubling of my interest rate is scary," Patten said.
"It's going to be about $700 a week extra."
He's now considering breaking his mortgage rate early and re-fixing now to avoid a more painful hike down the line, advice he's taken from his dad Bruce who's a mortgage adviser.
"We've had a lot of inquiry [from people asking] 'Is it worth me breaking now and fixing'," Bruce said.
Making matters worse is rising food costs. Stats NZ data out on Wednesday shows grocery prices are up 7.6 percent compared to the same time last year.
The Reserve Bank's lifting of the official cash rate is one of its main tools to curb inflation.
"What we hope is that we don't see them go too far the other way and push rates up too high," Bruce said.
An uncertain time for first-home owners and hopefuls no longer having the advantage of the early pandemic-era interest rates.
