A first-home buyer says he's "not very hopeful" a bank will approve his mortgage after the Reserve Bank put the Official Cash Rate (OCR) up to 0.75 percent.
The banks took just minutes to lift their own rates, which will put the squeeze on households with large amounts of debt.
Kyle Welch has only just managed to scrape together a 20 percent deposit to buy his first home, but he's still waiting on a bank to actually approve his mortgage.
"I'm not very hopeful, I'm holding out, just trying to do the best I can," he says.
The hurdles for hopeful home buyers are getting even higher - most of the major banks have stopped accepting applications from anyone with less than a 20 percent deposit.
"Yeah, it's not very fair," Welch says.
The Reserve Bank lifted the OCR by 0.25 percent on Wednesday - the second increase in two months.
For the Reserve Bank, it was an attempt to let some air out of our over-inflated economy.
"You're looking at a group here who is paid to stop inflation getting out of control and we are determined to ensure that does not happen," says Reserve Bank governor Adrian Orr.
To stop it from spiralling, he's getting tough on those carrying too much debt or wanting to take it on.
"All mortgage holders who will be experiencing higher interest rates, we are talking about managing tail risks where people are taking on too much debt in an asset priced market that we believe is unsustainable," Orr says.
Some of the borrowers feeling it most are businesses in Auckland coming out of lockdown but still at breaking point.
"That area of the economy that is clearly really doing it tough, and these interest rate changes aren't going to make it any easier," says Fisher Funds head of fixed income David McLeish.
The door for debt is closing on many, and Welch says he'll be heartbroken if he can't buy a home.
"This is our last-ditch attempt. I'm in my 30s now so we've been saving for a long time, and it's just realistically not going to happen."
One thing you can bank on happening is rates continuing to rise.