Stats show fewer Kiwis are entering retirement mortgage-free

by Ksenia Stepanova04 Mar 2019

The first OneRoof Property Report 2019 was released today, with figures showing that New Zealand’s biggest market – Auckland – continues to soften, while urban markets including Whangarei, Rotorua, Hawke’s Bay and Dunedin continue to have solid growth potential.

The report also showed that the number of properties to have cleared their mortgage has dropped to 70%, down from 80% five years ago. According to OneRoof editor Owen Vaughan, this, combined with the potential for interest rates to rise, could mean a bleak picture for those still repaying their mortgage during their retirement.

“There is a growing number of people aged over 55 who are heading into retirement with a mortgage still on their home,” Vaughan stated. “Five years ago, 80% of Kiwis retired mortgage free. Now, it’s down to 70% and looking even dimmer for the 55 to 64 age group.”

“It wasn’t so long ago that homeowners in New Zealand faced interest rates of up to 10 percent,” he explained. “But back then, house prices were lower and the size of people’s mortgage debt was smaller. We found that Auckland homeowners may have to pay more than $1000 extra a month on their existing mortgage repayment if interest rates creep up to seven percent.”

The report found that Wellingtonians could be paying up to $800 more per month, and borrowers in Tauranga would pay an extra $600.

Coromandel currently tops the charts for mortgage-free homes owned, with other cities with “bargain-basement prices” such as Wairoa and Ruapehu following close behind. By contrast, only 27% of properties in the Waikato District are mortgage free, and Selwyn, Arthur’s Pass, Lower and Upper Hutt and Porirua are all “highly mortgaged.”

Vaughan says he hopes the analysis would help clients make sense of where their home sits within the wider property market, and help inform their property decisions for 2019.

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