A business commentator doesn't think there's widespread stress among homeowners with mortgages despite rapidly rising interest rates.
New forecasts by Infometrics have stoked fears interest rates will rise even higher than anticipated. It estimates the average mortgage rate currently being paid by households will increase from 4.2 percent to 5.7 percent by the second half of 2024 - well above the Reserve Bank's prediction of the official cash rate (OCR) peaking at 4 percent.
Despite rising interest rates, Bernard Hickey, author of the business and economics newsletter The Kākā, told AM that doesn't mean homeowners were struggling.
Asked by host Melissa Chan-Green if homeowners are in for more pain due to rising interest rates, Hickey said many homeowners already had significant equity.
"For most people who own homes, they've held them for quite some time - they have a lot of equity, they also have a lot of income.
"One of the dirty little secrets of our supposed 'squeezed middle'... they're actually receiving 10 percent more income than they received a couple of years ago so they're actually ahead of inflation.
"There's plenty of cash around and, actually, when you look at what's happened to term deposits and cash accounts - there's an extra $30 billion in cash sitting there that wasn't there, pre-COVID."
He said the total amount New Zealanders spent servicing their mortgages was very low.
"The people who have a home are in pretty good shape, even if their mortgage rates go up," Hickey said. "The real stress is at the bottom end where people are renting, where rents are still rising 5-6 percent per year… They're the ones where the real stress is and this winter is, obviously, an awful one for those people.
"If you rent, you're in trouble. If you own a home, you're fine."
Hickey said claims of widespread mortgage stress were "just plain wrong".
"Actually, anyone who owns a home and has been able to put away some savings - and most of them have because interest rates have been very low for a long time - they have plenty of cash to pull out if they need it and, actually, with 3.2 percent unemployment, anyone who's in a home probably has some sort of solid job with good income coming in."
He said unlike homeowners, renters haven't reaped the benefits of significant house price rises in the past couple of years.
"Even if we had a 30 percent fall in house prices, only 1 percent of the total mortgage stock would be in trouble - of people who couldn't pay their mortgages.
"Remember, as long as you've got a job, the bank is never going to kick you out," Hickey said.
After the Reserve Bank (RBNZ) delivered its sixth straight interest rate hike on Wednesday - up 50 basis points to 2.5 percent - National Party deputy leader and Finance spokesperson Nicola Willis said "anyone due to re-fix their mortgage in the coming months will get hammered by rapidly rising borrowing costs".
"Under Labour, a family with an 80 percent mortgage on an average priced home will pay nearly $350 more per week in interest payments today than when Labour came to office," she said in a statement.
Finance Minister Grant Robertson has said the RBNZ makes its decisions independent of the Government but acknowledged earlier this year that "higher mortgage rates will add to cost of living pressures for New Zealanders".
Central banks around the world were responding to rising inflation by hiking interest rates, he said.
