New Zealanders are increasingly worried about interest rates as RBNZ raises rates to 14-year highs
The Reserve Bank of New Zealand’s record 11 interest rate increases in only 18 months are clearly having an impact according to the latest Roy Morgan research into the attitudes of New Zealanders towards the level of interest rates.
Official interest rates in New Zealand have increased from a record low of 0.25% (March 2020 to October 2021) to 5.25% by April 2023 – an increase of 5% points in only 18 months. By the end of 2022 interest rates had already increased to 4.25% - up 4% points in just over a year.
In the year to June 2021 just over a third of New Zealanders, 34.6%, were worried about interest rates, but this had increased significantly by the end of last year to over half of New Zealanders, 54.1%, in the year to December 2022 – an increase of 19.5% points (+56.2% on 18 months earlier).
% of New Zealanders who agree “I’m worried about interest rates at the moment”
Source: Roy Morgan Single Source, January 2018 – December 2022. Base: New Zealanders aged 14+, 12mma results and n= an average of 6,506 interview for each 12 month period.
Rising interest rates are hitting people paying off their home the hardest
The rising interest rates in New Zealand are due to the high level of inflation in the economy which started to increase in mid-2021 and hit a high of 7.3% in the June quarter 2022 according to the official agency Stats NZ. This is the highest rate of inflation for the New Zealand economy since the June quarter 1990 (7.6%) over 30 years ago.
Since then, inflation in New Zealand has stayed high and only come down slightly with the latest figures for early 2023 showing official annual inflation at 6.7% - only marginally lower than a year ago.
The increases to interest rates over the last 18 months are designed to lower the inflationary pressures in the economy but have hit New Zealanders with a mortgage harder than other groups such as home-owners and renters.
The following chart tracks agreement with the statement that ‘I’m worried about interest rates at the moment’ by housing category over the last five years. The chart shows that New Zealanders who are paying off their home are the most sensitive to interest rate changes – either on the way down, or on the way up.
% of New Zealanders who agree “I’m worried about interest rates at the moment” by housing category
Source: Roy Morgan Single Source, January 2018 – December 2022. Base: New Zealanders aged 14+, 12mma results and n= an average of 6,506 interview for each 12 month period.
Official interest rates in New Zealand were at 1.75% in December 2018 but were reduced on three occasions over the next 15 months in May 2019 (down 0.25% to 1.5%), August 2019 (down 0.5% to 1%) and again in March 2020 (down 0.75% to 0.25%).
The reductions in interest rates during this period had the largest impact on people paying off their home (the red line below) – the proportion worried about interest rates dropped to only 21.6% in March 2021.
At the same time, the proportion of home owners worried about interest rates increased during this period. Many people in this category are older New Zealanders on fixed incomes who receive less income when interest rates go down too far.
During mid-2021 it became clear inflation was set to increase rapidly and soon after that the Reserve Bank of New Zealand began its present cycle of interest rate increases – lifting interest rates from the record low of 0.25% in October 2021 to 5.25% today.
Since mid-2021 there has been a rapid increase in the proportion of New Zealanders who are paying off their home who are worried about interest rates – up from 23.1% in June 2021 to 63.3% by the end of 2022 – an increase of over 40% points (+174.4%).
Concern about interest rates has increased for renters and home owners as well – but at a much lower rate. Now around half of renters (50.1%) and home owners (49.2%) say they are worried about interest rates.
Michele Levine, CEO Roy Morgan, says the rapid series of interest rate increases by the Reserve Bank of New Zealand over the last 18 months is clearly hitting people with a mortgage harder than others – and this is set to be a key election issue later this year:
“Roy Morgan’s latest data into how New Zealanders feel about interest rates reveals over half of people in New Zealand (54.1%) now say they are ‘worried about interest rates at the moment’ – up from 34.6% in June 2021 – an increase of almost 20% points in only 18 months.
“A look at concern about interest rates by housing category reveals that, unsurprisingly, the rapid set of interest rate increases since late 2021 is hitting New Zealanders with a mortgage harder than anyone else.
“Now nearly two-thirds of New Zealanders who are paying off their home, 63.3%, say they are ‘worried about interest rates at the moment’ – up from a low of only 21.6% in March 2021. This is an increase of over 40% points in a year-and-a-half – and the RBNZ has raised interest rates even further since the end of last year.
“Although New Zealanders with a mortgage are already the most concerned about the rising interest rates – which have increased from a record low of 0.25% in October 2021 to 5.25% today – there is reason to believe the full impact of the interest rate increases already taken has yet to truly be felt.
“According to ANZ New Zealand Chief Economist Sharon Zollner, ‘In New Zealand, only about 10 per cent of mortgage debt is floating (or variable). So quite a lot of people are yet to roll over onto the latest effective mortgage rates of around 4.5 per cent,’
“If Ms. Zollner is correct – there is set to be a lot of mortgage rate resets to interest rates over the next 12 months in New Zealand as people on fixed rate loans roll off onto much higher interest rates.
“The latest Roy Morgan New Zealand Poll for April shows that the New Zealand election later this year is currently on a knife-edge with neither a potential National-Act NZ coalition (44.5%) or the current Labour-Greens governing coalition (42%) looking likely to secure a majority of seats at this year’s national election.
“The sensitivity of many New Zealanders to further interest rate increases is growing and whichever party can offer a compelling policy to those hit hardest with rising inflation and interest rates stands a good chance of winning this year’s election.
“Roy Morgan will be keeping a close eye on the issues impacting New Zealanders over the next few months as we close in on the election due in mid-October.”
For comments or more information about Roy Morgan’s research into New Zealand consumers please contact:
Roy Morgan Enquiries
Office: +61 (3) 9224 5309
askroymorgan@roymorgan.com
Margin of Error
The margin of error to be allowed for in any estimate depends mainly on the number of interviews on which it is based. Margin of error gives indications of the likely range within which estimates would be 95% likely to fall, expressed as the number of percentage points above or below the actual estimate. Allowance for design effects (such as stratification and weighting) should be made as appropriate.
| Sample Size | Percentage Estimate |
| 40% – 60% | 25% or 75% | 10% or 90% | 5% or 95% | |
| 1,000 | ±3.0 | ±2.7 | ±1.9 | ±1.3 |
| 5,000 | ±1.4 | ±1.2 | ±0.8 | ±0.6 |
| 7,500 | ±1.1 | ±1.0 | ±0.7 | ±0.5 |
| 10,000 | ±1.0 | ±0.9 | ±0.6 | ±0.4 |
| 20,000 | ±0.7 | ±0.6 | ±0.4 | ±0.3 |
| 50,000 | ±0.4 | ±0.4 | ±0.3 | ±0.2 |
