Roy Morgan has reported growing concern among New Zealanders for the record 11 interest rate rises over the last 18 months.
The Reserve Bank of New Zealand (RBNZ) has raised official interest rates from a record low of 0.25% (March 2020 to October 2021) to 5.25% by April 2023.
By the end of 2022, interest rates had already increased to 4.25% - up 4% in just over a year.
In the year to June 2021, 34.6% of NZ consumers were worried about interest rates, but this had increased significantly by the end of last year to over half of New Zealanders (54.1%).
The rising interest rates in NZ are due to the high level of inflation in the economy, Roy Morgan stated, which started to increase in mid-2021 and hit a high of 7.3% in the June quarter of 2022 according to the official agency Stats NZ.
This is the highest rate of inflation for the New Zealand economy since the June quarter 1990 (7.6%) over 30 years ago.
Since then, inflation in New Zealand has stayed high, with the latest figures for early 2023 showing official annual inflation at 6.7%.
The increases in interest rates over the last 18 months are designed to lower the inflationary pressures in the economy but have hit New Zealanders with a mortgage harder than other groups such as homeowners and renters.
Roy Morgan CEO Michele Levine said the challenge with mortgage owners in particular will be a key election issue later this year.
“A look at concern about interest rates by housing category reveals that, unsurprisingly, the rapid set of interest rate increases since late 2021 is hitting New Zealanders with a mortgage harder than anyone else,” Levine said.
“Now nearly two-thirds of New Zealanders who are paying off their home, 63.3%, say they are ‘worried about interest rates at the moment’ – up from a low of only 21.6% in March 2021. This is an increase of over 40% points in a year-and-a-half – and the RBNZ has raised interest rates even further since the end of last year.
“Although New Zealanders with a mortgage are already the most concerned about the rising interest rates – which have increased from a record low of 0.25% in October 2021 to 5.25% today – there is reason to believe the full impact of the interest rate increases already taken has yet to truly be felt.
Quoting ANZ New Zealand chief economist Sharon Zollner, Levine said only around 10 per cent of mortgage debt is floating (or variable). This means that a fair amount of people are yet to roll over onto the latest effective mortgage rates of around 4.5 per cent.
“If Ms. Zollner is correct – there is set to be a lot of mortgage rate resets to interest rates over the next 12 months in New Zealand as people on fixed rate loans roll off onto much higher interest rates,” Levine said.
“The latest Roy Morgan New Zealand Poll for April shows that the New Zealand election later this year is currently on a knife-edge with neither a potential National-Act NZ coalition (44.5%) or the current Labour-Greens governing coalition (42%) looking likely to secure a majority of seats at this year’s national election.
“The sensitivity of many New Zealanders to further interest rate increases is growing and whichever party can offer a compelling policy to those hit hardest with rising inflation and interest rates stands a good chance of winning this year’s election.
“Roy Morgan will be keeping a close eye on the issues impacting New Zealanders over the next few months as we close in on the election due in mid-October.”
Meanwhile, Roy Morgan noted that New Zealand consumer confidence remained flat at 79.2.
It added that the proportion of people who believe it is a 'good time to buy' a major household item, a key retail indicator, was unchanged at 24% in May, while those saying it is a 'bad time to buy' increased 3% points to 58% leaving the net result down 3 points to -34.