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MNI BRIEF:RBNZ Warns Mortgages To Sap 22% of Disposable Income

MNI (PERTH)
(MNI) Perth

Reserve Bank of New Zealand Assistant Governor Karen Silk warned on Thursday that borrowers could be spending up to 22% of their disposable income on servicing mortgages as they are repriced higher.

Speaking before a parliamentary committee, Silk said the average mortgage rate on the outstanding stock of mortgages was roughly 4.5%, but with around 50% of loans to be repriced over the next 12 months that would take the average rate to around 6.5%.

"As at December 22, on average, debt servicing - so that's meeting the interest payments - was roughly 9% of disposable income on average. Our estimate would be that at a 6.5% average rate that would move to roughly 22% on average."

The RBNZ raised the Official Cash Rate by 50bp to 4.75% on Wednesday. (See MNI RBNZ WATCH: More Hikes Coming, 25bps An Option For April)

Robert covers RBA and RBNZ policy and the economy for MNI in Australia.
Central Bank NewsPolicy NewsRBNZAPACNew ZealandBriefStoryRegion
Robert covers RBA and RBNZ policy and the economy for MNI in Australia.
Central Bank NewsPolicy NewsRBNZAPACNew ZealandBriefStoryRegion

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