Homeowners are feeling the pinch of rising interest rates, with nearly half of mortgage holders worried about the level of debt they’re in and/or worried about finances from pay to pay.
The results, recorded in the first quarter of 2023, are the highest since Te Ara Ahunga Ora Retirement Commission started tracking financial wellbeing insights in early 2021. Surveys are conducted with a nationally representative sample of around 1000 people a quarter.
The number of mortgage holders describing their financial situation as ‘sinking a bit’ or ‘just treading water’ is also trending upwards, at 49% compared to 42% a year ago.
The findings show Kiwi households are feeling pressure from high interest rates, which have skyrocketed from an average of 3.23% for 1-year fixed rate in 2021 to 7.11% in 2023.
This means a mortgage holder paying $3,473 a month in 2021 for an $800,000 loan could now be paying $5,382, requiring them to find an extra $441 a week in an already stretched household budget.
To help those trying to navigate the changing interest rates, Sorted has released an enhanced Mortgage Calculator to empower Kiwis to make informed decisions about their mortgages.
The new mortgage calculator features a live feed drawing mortgage rates from interest.co.nz, allowing users looking to refix their mortgages to compare rates from lenders in real time.
“Our enhanced mortgage calculator is our most popular piece of content, so we are thrilled to make it even more useful for New Zealanders,” said Tom Hartmann, Personal Finance Lead at Sorted.
The new tool also highlights opportunities to save tens of thousands of dollars potentially by nudging users towards the benefits of more regular payments and lowest-interest scenarios.
“We know that buying a home is one of the most significant financial decisions that New Zealanders make, and we want to ensure that they have access to the best tools to navigate this,” says Hartmann.
The dynamic graph displays how principal and interest can be paid down over time, providing a visual that updates automatically as users adjust levers that could influence the way they pay the mortgage, such as repayment, rate, or term.
Additional features include the ability to split a mortgage, select an interest-only scenario, and compare multiple mortgage scenarios. The tool also provides new support for first-home buyers through a dedicated pathway, making it easier for them to navigate the complex process of buying a first home.
Interest.co.nz publisher David Chaston says the calculator will be useful for Kiwi families trying to manage their budget and figure out the best route to paying off their mortgage.
“Being able to easily see the impact of splitting a mortgage between banks/institutions is now very easy, especially because you get seamless access to the updated and current interest rates for each term,” he says.
“This calculator can show you how to get that benefit by shifting to a lower rate offer, making today's household budget that little bit easier to manage.”
The new mortgage calculator has two user modes: first-home buyer (with deposit) and instant access, where users can input loan amount, interest rate, and term directly. Users can toggle the frequency view paydown by fortnight, month, and year and receive an extra payment amount prompt to see the instant impact on the paydown bar chart.
Sorted's mortgage calculator is the #1 organic search result for mortgage calculators, drawing hundreds of thousands of views each year.
To try the new mortgage calculator, visit sorted.org.nz/mortgage-calculator.
Notes to editors:
Sorted is a free service run by Te Ara Ahunga Ora Retirement Commission, the government-funded, independent agency dedicated to helping New Zealanders get ahead financially. As New Zealand’s trusted personal finance site, Sorted has the information needed to tackle debt, plan and budget, save and invest, dial up your KiwiSaver, plan for retirement, protect what's important, and manage a mortgage. Providing tools, guides and blogs, Sorted can help no matter where you are at when it comes to money.
Te Ara Ahunga Ora Retirement Commission Insights Tracker
Valuable insights on New Zealanders' financial confidence and access to financial advice is regularly gathered through surveying by TRA on behalf of Te Ara Ahunga Ora. Surveys are conducted with around 1000 people a quarter.
For interviews contact:
Georgette Hart - Communications Specialist
Ph: 021 0854 1230