Cost of living: Cameron Bagrie predicts rates to stay high in 2024, decline will be 'slow, long crawl'

A leading economist has bad news for Kiwis with mortgages, predicting a drop in interest rates to be a "slow, long crawl". 

It comes after the latest Centrix report released last week showed in November more than 19,200 mortgage accounts were overdue, up 25 percent year on year.   

Loans are also continuing to be refinanced with higher interest rates due to the current cost of living crisis.   

Kiwis have been battling the cost of living crisis for just over two years with inflation one of the big headaches, remaining stubbornly high at 5.6 percent – more than double the Reserve Bank's (RBNZ) target. 

The price of food is another unwanted headache, with Stats NZ releasing figures last month showing food prices remained 6.3 percent higher in October than they were a year earlier. 

Then adding to all this, thousands of Kiwis are in the midst of or have re-fixed their mortgages this year from a low rate seen during COVID-19 of around 2-3 percent to new rates of around 6-7 percent.  

But there have been signs that things could be easing with New Zealand's current inflation rate at its lowest level since December 2021. 

This has seen some experts say cuts to interest rates could be on the way early next year.  

But independent economist Cameron Bagrie didn't share the same sentiment when speaking to AM on Tuesday morning. 

"I think interest rates are going to remain high through 2024 and we might see them come down in 2025. Directionally, inflation is getting lower, which is very encouraging," he said. 

He told AM co-host Ryan Bridge while it's "very encouraging" that inflation has started declining, he warned New Zealand is only just starting its true battle with it.  

"The real battle is getting inflation from 4 to 5 percent down to 2 percent and that's where I think it's going to be a slow, long crawl," he told AM. 

It comes after the Reserve Bank (RBNZ) announced at the end of last month that it held interest rates in its final monetary policy decision of the year.  

The central bank kept the official cash rate (OCR) at 5.5 percent - repeating its previous four decisions after 12 consecutive increases. 

But the RBNZ said it was "wary of ongoing inflationary pressures" and ruled out cuts anytime soon. 

In a bid to tame inflation, which new Finance Minister Nicola Willis labelled as "enemy number one", the new Government announced at the post-Cabinet press conference on Monday that legislation would be introduced next week to return the sole focus of the Reserve Bank to an inflation target. 

"New Zealand was the first country in the world to implement an inflation target, it was extremely successful after years of high and volatile inflation we managed to turn a corner and bring inflation back down to earth," Willis said on Monday.  

"Today we face a similar task, inflation has been out of target for two-and-a-half years. That is why the Government will be restoring the Reserve Bank's single focus on inflation." 

Watch the interview above for more.