Economist Jarrod Kerr believes Reserve Bank will 'have to' consider rising mortgage anxiety in official cash rate decision

Kiwibank's chief economist Jarrod Kerr believes the Reserve Bank will "have to" consider rising mortgage anxiety when making next week's official cash rate decision.   

The Reserve Bank surveyed 1000 New Zealand residents in the first two months of this year to monitor expectations around rent and mortgage serviceability, as well as employment security.  

It found that across all three, anxiety is rising.   

People were asked how likely it was they could miss a mortgage payment in the next three months. The average percentage increased from 12.4 to 17.3.  

The same was asked of renters. The average percentage rose from 16.2 to 18.  

For context, average mortgage payments increased by 27.5 percent in the year to June, making property ownership expensive for landlords, who often pass on the cost to renters.  

The survey also revealed a sharp rise in how likely people thought it was they could lose their job in the next 12 months.   

Te Uira Mahuta Hone Eruera from the Auckland suburb of Ōrewa works casual hours doing traffic control work but he would like to do more.   

"I'd like to get a good job that gives good pay and then you'd be able to get good hours. But this is what we're talking about aye, there's not enough. There's not enough going around," he told Newshub.   

He's right. Data from Seek shows applications per job advertisement have increased in almost all industries.  

Tess Porter manages the Mt Roskill branch of the Citizens Advice Bureau in Auckland. She has observed a rise in financial stress.  

"A real number of people on casual work, insecure work where their hours have dropped, their incomes have dropped - particularly over that holiday period - and that's causing some real stress, and you get things like increasing rents on top of that."  

According to Stats NZ, retail spending has fallen for the eighth quarter in a row.  

Kerr believes the Reserve Bank will need to take all the economic pain into consideration when making its official cash rate decision next week.  

"They will have to take that into account, and hopefully that will keep them from hiking further," he told Newshub.   

"Our argument is that the Reserve Bank does not need to raise interest rates further. The pain is being felt now."