Struggling with High Mortgage Rates? Here's What NZ Homeowners Need to Know (and Do)

If you’re a Kiwi homeowner sweating over mortgage payments, you’re not alone. Interest rates have surged from the lows of 2020–2021 to levels we haven’t seen in over a decade. For many, what was once a manageable weekly cost is now a financial chokehold. Whether you’re a first-home buyer who bought at the peak, or a long-time owner facing massive rollovers — it’s bloody tough out there.

But here’s the good news: you’ve got options. And the sooner you act, the more control you’ll have.

What’s Going On?

The OCR (Official Cash Rate) shot up to combat inflation, and that’s driven mortgage rates well past 6%, with some banks quoting over 7% on fixed terms. That’s hundreds, even thousands, more per month on the same loan.

If you're on an interest-only loan, it's a lesser blow — but for principal and interest borrowers, it’s a proper gut punch. And the banks? They're watching. They’ve got risk thresholds. If your debt servicing ratio looks shaky, they’ll want action.

What You Can Do Right Now

1. Review Your Loan Structure

Don’t wait for the bank to contact you. Be proactive:

• Split your mortgage: Mix fixed and floating.

• Stretch the term: Longer terms mean lower monthly payments (yes, you’ll pay more interest over time, but it buys you breathing room).

• Ask for interest-only: If you’re under real pressure, some lenders will approve a switch to interest-only short-term. It’s not a forever solution, but it’ll ease the squeeze.

2. Revisit Your Budget

Strip out the fluff. Subscriptions, unused gym memberships, the $8 daily coffee habit — it all adds up. Prioritise the mortgage. Protect the roof over your head.

3. Talk to Your Bank or a Broker

You’ve got more leverage than you think — especially if you've got equity. A broker can shop your loan around to see who’s hungrier for your business. Loyalty to your bank doesn’t pay the bills.

4. Consider Selling Early (if you need to)

This one’s tough, but it’s better to sell with control than wait until you’re desperate. If you're cash flow negative, and the market isn’t turning soon, look at the numbers cold. A smaller place, or renting for a year, might put you back in the game later on.

Warning Signs You're in the Danger Zone:

• You’ve missed a payment or two

• You’re relying on credit cards to cover basics

• Your fixed term expires in the next 6 months

• You’re using savings just to keep up

If any of these ring true, don’t bury your head. Act now.

Final Thoughts

This market isn’t forever. Inflation will drop, the OCR will ease (eventually), and rates will follow — but you’ve got to get there in one piece. The game now is survival. Hold the property, protect your credit, and be ready when the tide turns.

Want to talk through your options? Whether it's refinancing, selling, or restructuring — I’m here to help. No fluff, just straight answers.