A Rotorua mum of five whose children play sports at a representative level says each child has had to drop a code due to the family mortgage skyrocketing by $180 a week.
Kelly Albrecht agreed it was a heartbreaking decision, but said it was necessary because it was impossible to afford every tournament, despite the sporting fraternity seeking more financial support and her own fundraising efforts.
Homeowners are feeling the pinch of rising interest rates and living cost increases that outstrip inflation. With 80 per cent of fixed-term loans due to reprice in less than two years, more homeowners are seeking budget advice or taking drastic action to cut costs.
The Albrechts had made other sacrifices since refixing their mortgage in August last year, including getting rid of Sky TV, downsizing their 10-seater van to save $70 a week on petrol and negotiating better rates for insurance.
She said the grocery bill was another focus and unfortunately, it was cheaper to buy a six-pack of pies for lunch instead of making ham, egg and tomato sandwiches.
“We want to eat healthier, but it’s too expensive and the main meat we buy is chicken, mince and sausages … to be honest, because we are eating cheap food, we’ve probably gained a bit of weight.”
Albrecht did not buy new clothes or shoes or anything for herself and had no other debt other than the mortgage.
“As long as my kids have those things and they can do sport, that is what fills my cup. I don’t care about me – that’s the last of my worries – my kids definitely come first. But if you’re not able to even do those things, that really makes you feel like you failed as a parent sometimes.”
She even contemplated selling the house. “I don’t really want to go backwards - I love the house we’re in, and we’ve worked really hard to renovate it to have six bedrooms.”
The children’s awareness of the family’s financial situation “made them stronger kids”, she said.
“There are pluses and minuses they are learning and [they] can see mum and dad work really hard, so it’s all about being thankful and appreciative.
“As a kid, I thought mum could pluck money out from wherever because I never understood money. My kids know there is no money tree, mum’s pockets are empty and she is literally finding crumbs … I feel that they understand money so much more now.”
The Albrechts are not alone.
Richard O’Neil said when his mortgage jumped from $760 to $1000 a week, it was the last straw. He sold his house in Tauranga about a month ago.
He was renting a new home for $695 a week, and without rates or home insurance, he was saving about $300 a week.
O’Neil said the sale proceeds would allow him and his wife to take holidays and “make memories with the kids”.
“We don’t need to own a home, but it has taken me a while to settle with that. It’s still very new, so I haven’t had much time to reflect and it’s taking a bit of getting used to. We could have met the mortgage payments, but we didn’t want to.”
He believed interest rates would continue to rise: “It feels good to be no longer part of that system and on the debt treadmill.”
Claire, who did not want her surname published, said she decluttered her house and sold items for extra money after her mortgage increased by $200 a week when it was refixed with a higher interest rate.
She and her husband had looked at moving out of Tauranga but could not bear to leave family.
The mother of one said there would be no more date nights, eyebrow waxes, dining out and activities like escape rooms.
Money was “very, very tight”, made harder by grocery and petrol prices and the crippling cost of living crisis.
“Usually you try to save money on those, but everything has gone up in price, including rates, which is really frustrating.”
She was self-employed and had to increase her rates, and was babysitting as a side hustle.
Half of their mortgage was fixed on a two-year rate and the rest for three years.
Rotorua Budget Advice manager Pakanui Tuhura said the number of homeowners seeking help had increased by 20-30 per cent.
“The level of mortgage debt is much higher, as many of the homeowner clients we are seeing these days are relatively new mortgage holders with larger debt due to the values of the properties they have purchased.”
In the past, he said, it was more common to see long-time mortgage holders in trouble after using their home as security for other loans and not being able to cover all the payments.
Mortgage Lab financial adviser Keith Munro said it was often difficult for people to rein in spending when they were used to a lifestyle they could no longer afford.
“Identify the ‘must haves’ and set a budget. Then it is a matter of being firm with decisions on what has to be left on the shelf. Putting the brakes on big-ticket items may be appropriate. For example, making do with older appliances and furnishings, putting off a trip.”
The Mortgage Centre Rotorua principal adviser Praveen Bhati said with the rising rates environment and cost of living crisis, “every single dollar that one can save is important”.
His team would look for “every opportunity” to help clients save money on their mortgage, such as by restructuring it to offset interest against their savings, negotiating rates with banks or moving to another bank for a better offer.
Banks spoken to by NZME last week were offering one-year fixed rates of 7.19 to 7.25 per cent, or 6.69 to 6.89 per cent for three years.
An ANZ spokeswoman said about 21 per cent of its loans had rates under 4 per cent and one-third of customers were ahead on their home loans by six months or more.
The bank was closely monitoring how customers were managing.
“We understand the cost of living and rising interest rates are having an impact as people come to refix their home loans.”
The number of mortgagee sales of residential properties over recent years had been low.
Kiwibank home lending general manager Nicole Pervan said its one-year term is the most popular, while about 1 per cent of home loans were on interest-only payments.
BNZ head of consumer lending Sarah Falanitule said about half of home loan customers had moved to rates of at least 6 per cent.
Mortgagee sales were still tracking below pre-Covid levels and were a last resort, she said.
BNZ ran Managing Your Money workshops across the country and online covering topics like budgeting, saving, borrowing and investing. Tools included tips and guides for money management.
The bank had a small uptick in mortgagee sales and expected these to increase closer to long-term norms.
A Reserve Bank of New Zealand spokesman said about 80 per cent of fixed-term loans were due to reprice in less than two years.
In July 2023, there were $350.5 billion in residential loans compared with $339b last July and $321b in July 2021.
As of July, $35.8b were on floating rates and $314.7b fixed.
The Stats NZ household living costs price index showed inflation faced by the average household in the 12 months to June was 7.2 per cent, more than a percentage point higher than the Consumers Price Index at 6 per cent.
The main contributors to higher living costs for the average household were higher interest payments (up 28.8 per cent) and grocery food prices (up 13.2 per cent).
Correction: An earlier version of this article incorrectly quoted Kelly Albrecht using the word heartbreaking. To clarify, she agreed it was heartbreaking.
Carmen Hall is a news director for the Bay of Plenty Times and Rotorua Daily Post, covering business and general news. She has been a Voyager Media Awards winner and a journalist for 25 years.
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