Therefore, a significant share of borrowers that purchased homes at rock-bottom pandemic rates will be required to refinance at much higher levels:ANZ believes “further mortgage rate increases [will] maintain downwards pressure on prices”. Mortgage rates are still lifting, housing scarcity has been greatly eroded, and affordability remains dire (albeit a little better). If ANZ is correct, and the Reserve Bank hikes interest rates as aggressively as forecast, then it will lift Kiwi mortgage rates even higher and further shrink borrowing capacity. When it becomes clear central banks have “over-tightened” there will be a rush to forecast rate cuts. When it arrives, and the Australian and New Zealand economies deteriorate, both our Reserve Banks will be forced to quickly change track and cut rates aggressively.

Source: New Zealand Herald October 01, 2022 00:11 UTC