An economist predicts the number of people making early Kiwisaver withdrawals will continue to remain higher than usual in 2024 as more people continue to refix their mortgages at higher rates.
Recent figures show the number of people accessing their Kiwisaver for hardship reasons has almost doubled.
KiwiSaver savings are used to buy a first home or after retirement, but some applicants can access their money outside of these reasons if they must prove they are in "significant financial hardship".
The latest figures from IRD show the number of KiwiSaver members making these withdrawals increased from 1570 people in October 2022, to 2800 people in October 2023.
The amount of money withdrawn from KiwiSaver due to financial hardship also increased from $10.3 million in October 2022 to $21.5m in October 2023.
What is largely driving the increase is a rise in mortgage rates in response to the Reserve Bank (RBNZ) lifting the Official Cash Rate (OCR) to try and control inflation.
The OCR has been held at 5.5 percent for the last four decisions, following 12 consecutive increases.
Infometrics chief forecaster Gareth Kiernan told AM that homeowners who refixed their mortgage two years ago at 2.8 percent are now looking at refixing at 6.7 percent for the lowest rate.
"So, if you've got a $500,000 mortgage that's an extra almost $500 a fortnight you've got to find," Kiernan told co-host Melissa Chan-Green.
Kiernan said the increase in people making these Kiwisaver withdrawals shows people are under a lot of financial stress as the threshold to take out the savings for financial hardship is quite high.
"We have seen in the past, I think three or four years ago, quite a lot of complaints from people that it was very difficult to get their money out so the fact that these numbers have been increasing does suggest there is real stress out there for some households," Kiernan said.
Unfortunately, he doesn't expect the number of withdrawals to fall any time soon.
While mortgage rates look like they are close to peaking now, Kiernan said people will continue to roll off those lower fixed rates through 2024 to higher rates.
"Probably another year I think of higher than usual withdrawal levels coming through," he said.
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