Kiwi households walloped by rising mortgage rates

The Reserve Bank of New Zealand (RBNZ) has lifted official interest rates more than most other central banks:

These increases in official interest rates have obviously driven mortgage rates sharply higher:

Not surprisingly, then, Statistics New Zealand reported that household interest costs soared by 39% in the year to September, from an index level of 897 in September 2021 to 1,249 in September 2022:

“The official cash rate, used by the Reserve Bank to control inflation, increased from 0.25 percent in September 2021 to 3.0 percent in September 2022,” [consumer prices manager Katrina Dewbery said].

“This is reflected in the HLPIs [household living-costs price indexes] by higher costs for interest payments.”

Last week’s shock New Zealand inflation result saw CPI rise by 7.2% in the year to September, which was much higher than any market forecasts. This is expected to be met with further aggressive rate hikes from the RBNZ, which will raise interest costs even further.