Survey Highlights Homeowners Unfazed by Interest Rate Rises
Survey highlights homeowners not fretting about interest rate rises
Monday 17 July 2017 - A new survey has revealed Kiwi homeowners are largely unfazed about their ability to cope with mortgage rate rises, but they are continuing to find it difficult to curb spending on consumer items.
The nationwide survey of 1,994 homeowners by the company, New Zealand Home Loans (NZHL), found more than half of respondents (57.6%) were either not concerned or were neutral about the potential for future interest rate increases.
The sentiment comes as the Reserve Bank left the official cash rate (OCR) on hold last month at 1.75% and economists are increasingly predicting rates to remain unchanged for some time yet.
Despite the view of interest rates, there is concern about the respondents’ ability to curb spending. The biggest problem area for curbing spending is on unplanned spending on consumer items such as household electronics, tools and sports goods where 47% of respondents found difficulty controlling spending and secondly for services like household maintenance at 46%.
Entertainment, such as concerts and movies and bad habits like cigarettes and alcohol are two other areas where respondents expressed difficulty in managing their spending.
NZHL Chief Executive Julian Travaglia says the survey results highlight some home truths about how people can manage their finances better.
“It is refreshing to see that homeowners are not overawed by the prospect of future rate rises. Not just because rates aren’t expected to change dramatically anytime soon but more because if we are to seriously tackle the amount of household debt we have as a nation, it is less about the actual interest rate and more about the rate home loans are paid off.”
“From that perspective, the fact people are recognising they need to curb spending on unplanned items is a good thing, as it allows money to be channelled into their largest expense their mortgage. And while a bit of belt tightening may seem difficult initially, when combined with a right home loan structure, the average household in the long run can save thousands of dollars in interest.”
“That rather than sweating about interest rates, has been shown to be a much clearer way to a future free of financial stress.”
About New Zealand Home Loans – Established in 1996, New Zealand Home Loans lends $5.5 billion in home loans to almost 20,000 New Zealand families from Dunedin to Kaitaia via its network of 78 franchises making it one of the country’s largest home loan providers.