Mortgage Link Taupō owner-director Wendy Yorke says as there is little people can do about rising interest rates, they need to look at other areas of their spending.
"I was at a conference last Friday where they said 50 per cent of mortgages in New Zealand are going to come up for refixing in the next 12 months," she says.
"A lot of people are around 2 or 3 per cent interest rates so they could see those doubled. There's nothing anyone can do so people will obviously have to look at their spending and adjust their habits to cope."
Wendy says the hike in interest rates was predicted, but it has come around faster than expected.
"You could fix shorter term at a lower rate, but then you run the risk of it being higher still when that term is up. They think it will take a couple of years to get inflation under control. So, it sounds like rates will be quite high for some time."
She says the worst thing to do by anyone who has concerns about their mortgage interest rate going up is put their head in the sand and ignore it.
"There's definitely worry about the rate getting up to 7 or 8 [per cent]. Whether it does, I hope not, because the Government doesn't want to see everyone in a mortgagee sale situation, they don't want to destroy the economy.
"People will look at other measures to help, like getting a boarder or flatmate, and if people are distressed they can do interest-only for a period of time. The banks are flexible on that sort of stuff because it's only temporary.
"Talk to the bank or an adviser as soon as possible to come up with a plan of attack. There are options."
Zest Brokers Insurance & Mortgages Taupō financial adviser Nicole Drought says her clients knew the interest rates would not stay low forever and most were prepared.
"There are definitely people getting a shock. Interest rates are going up because inflation is out of control, it's an attempt to slow spending and therefore reduce inflation.
"I've been preparing my clients for this during the last year or two, so it's not a big surprise, and 99 per cent of them are okay. With new purchasers it's looking at what their payments would be at a higher rate and being prepared for that.
"I do understand that the majority of people elsewhere will be getting hit with it, It's just one of those things, interest rates are out of our control and we have had a false sense of security during the last five years with these record-low rates."
Nicole says people need to take responsibility for their spending.
"I think some people have forgotten the true cost of a mortgage because the rates have been so low. A little over 10 years ago the floating interest rate was 11 or 12 per cent, before that huge drop.
"To people coming into the market in the last couple of years with 2 per cent interest rates, it feels like that's what the norm is, so they're getting a big shock. I've tried to educate clients that this is not the norm and it was only a matter of time before they came back up."
Her advice to those with concerns about refixing is to look at their discretionary spending and talk to an expert if possible.
"Things just have to get cut if you want to afford the increase. Of course, you can shop around too, make sure you're getting the best rate possible."
