‘Falling Off The Property Ladder’
$1,000,000 House – $700,000 Mortgage
1% Rate Rise = $135 PER WEEK!
$900,000 Mortgage = $173 PER WEEK!
All going to the Banks rather then into the economy. Insanity.
Pressure on employers to boost workers’ wages is not going to be enough to cover the rising cost of mortgage rates, warns an economist.
Daniel Snowden, who analyses retail and consumer economic data for the ASB bank, said mortgage rates were roughly back to where they were a year ago but in about 18 months time were likely to be higher.
“In 18 months time it will be particularly unpleasant for people rolling off two-year rates,” Snowden said. Banks began lifting longer-term fixed mortgage rates at the end of last year and that has been followed by a flurry of increases in January.
Kiwibank has increased some of its fixed-term mortgages rates twice already this year and ASB also announced plans to increase its rates last week. While smaller banks SBS bank and the Co-operative Bank have also raised rates.
The banks have blamed rising funding costs from borrowing money in the offshore market for the rate rises.
“With the majority of mortgages fixed for two years or less, rising interest rates are going to impact people much more quickly in the current cycle compared with when interest rate cuts happened back in 2008/09.”
It’s recommended people calculate what a higher rate would cost them ahead of time to see what they could afford.