Mortgagelab owner Rupert Gough has shared some top tips on how Kiwis can save money amid rising interest rates.
It comes after The Reserve Bank hiked the OCR to 4.25%, an increase of 75 basis points from the previous rate of 3.5%.
When the OCR goes up, commercial banks like ASB will generally increase their interest rates they charge on your mortgage, credit cards and other loans.
Speaking to Breakfast this morning, Gough said technically, if the bank has given someone a mortgage in the past year they should still be able to afford it if they cut back on "absolutely everything".
"There are people that have unexpected costs come up, people got into that market but if you can get through this next year or so then you know interest rates will come down, price of property will go up again, you've got to think long term, holding is always a good option in terms of property ownership."
Gough said there are a few measures Kiwis can take to lessen their financial stresses at the moment:
- Review what you're spending day to day, including paid subscription services like Netflix
- If you can't stop the money going out, you need to increase the money coming in
- Looking for a second stream of income or seeking a job with better pay
- Writing down how much money you think you've spent in a period of time, then printing out bank statements and comparing the numbers.
Speaking to Breakfast last week financial adviser Carissa Fairbrother warned that Kiwis should reassess their spending habits if they want to make ends meet.
She said with previous low interest rates, a lot of people have felt "wealthier".
"The reality is for many people in New Zealand they're already doing it tough but there is also a section, a great section of New Zealanders who post-Covid who have had that cheaper money and done really well and have been spending above and beyond their means with you know, buy now pay later schemes."
Reserve Bank Governor Adrian Orr says there's light at the end of the tunnel but people should be careful.
"Inflation is no one's friend and our job is to contain inflation back to 1-3%."
He said at the moment, the economy is "running hot" with employment levels at a record high.
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