New data released by the Finance and Mortgage Advisers Association of New Zealand (FAMNZ) reveals that three in five (59 per cent) New Zealanders may be suffering from ‘mortgage stress’ putting them at risk of not meeting monthly repayments.
‘Mortgage stress’ affects mortgage holders with repayments that are 30 per cent or greater of their household income, with the research also finding that nearly one in four (24 per cent) spend over half their income on mortgage repayments each month.
FAMNZ’s Consumer Access to Mortgages 2024 report, which polled 1000 consumers in partnership with Agile Market Intelligence, comes following a 3.8 per cent increase in the cost of living for the average household in the last year. [1]
In the study, almost two in five (37 per cent) New Zealanders said their financial situation has worsened over the last 12 months, with 43 per cent citing an increase in interest repayments as a key factor.
Leigh Hodgetts, Country Manager for FAMNZ, said “as borrowers roll off fixed rates, mortgage stress is a challenge many households are facing.
“The recent decision to lower the Official Cash Rate (OCR) by 0.5 per cent should go some way towards helping Kiwis, but there is a long way to go to boost consumer confidence in managing existing debt more comfortably.”
The study found that one in four (26 per cent) mortgage holders are actively considering refinancing, while one in five (20 per cent) have already taken the leap.
However for some consumers this is not an option as more than one in four (27 per cent) borrowers under stress may be considered ‘mortgage prisoners’ believing they will be unable to refinance due to new servicing requirements or other financial circumstances.
Ms Hodgetts urged those who can’t refinance to see a mortgage adviser as “there are many options for consumers that many people are unaware of, including some non-bank lenders that can only be accessed through an adviser.”
She said that while Kiwis experiencing mortgage stress have had a tough year, “another OCR drop is hopefully on the horizon, and consumers can start to feel more optimistic in exploring mortgage products that better suit their needs, helping to relieve some of the financial burden.”
[1] https://www.1news.co.nz/2024/11/05/average-household-living-costs-up-38-in-past-year-stats-nz/
