12 Nov 2013

Aucklanders to feel squeeze as mortgage rates rise

10:33 am on 12 November 2013

Aucklanders are expected to feel the pinch more than most when - as forecast - mortgage rates start to rise.

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Photo: PHOTO NZ

The Reserve Bank has signalled it will start hiking rates in the first half of next year, and analysts say mortgages could rise steadily to about 8% by 2015.

Mortgages already average $400,000 in the Auckland region's overheated property market and some commentators warn household budgets will be stretched as interest costs rise.

Mortgage broker Geoff Bawden calculates for every $100,000 borrowed, a 1% rise will add $64 to a weekly mortgage payment.

But Mr Bawden says as a result of the 2008 recession people and banks have been more cautious about taking on a mortage, and he's not expecting it to result in a flood of people losing their homes.

Higher interest rates will also be good news for savers, who've had to endure poor returns in recent times.