PHOTO: SUPPLIED – Mieke Welvaert: There’s not a lot of interest rate pain at present.
New Zealand households have been given a warning – low interest rates cannot continue forever and when they rise, it could be seriously painful.
The Reserve Bank raised concerns in its Financial Stability Report this month that just 8 per cent of the country’s households owe 40 per cent of all the money owed on New Zealand home loans.
Recent first-home buyers were deeply indebted compared to households headed by people who bought their homes when house prices were much lower.
In 1998, the average household had debt equal to about 46 per cent of it its income. By the end of last year that had hit 168 per cent. But recent borrowers have even higher rates of debt. It is not uncommon for first-home buyers to have mortgages that are five times their income or more.
READ MORE: Low interest rates no good to new borrowers
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