Belief in housing market heading down, economist says
The state-owned bank’s one-year standard rate for borrowers with less than 20% equity in their homes has gone from 4.85% to 4.99%, while its two-year standard rate home loan was lifted from 5.49% to 5.55%, Stuff reported.
The government is facing a political crisis as living costs are increasing significantly faster than wages, or benefits, with both inflation and home loan rates rising. Its impact to households is what ASB economist Nick Tuffley described as “costpocolypse.”
“Call it a crisis, challenge, or a mere ’costpocalypse’, but the cost of living keeps soaring,” Tuffley told the publication.
Fuel prices have surged due to Russia’s invasion of Ukraine, and food prices have risen at the fastest rate in more than 10 years, prompting the government to implement an emergency cut in fuel tax for three months.
“In February, food prices rose 6.8% from a year earlier, the fastest pace of food price inflation in over a decade,” Tuffley told Stuff. “Within that, fresh produce prices jumped 17%. Retail grain and dairy prices are likely to come under further upward pressure this year.”
The ASB economist said one thing that was heading down was the belief in housing market, with ASB’s latest Housing Confidence Survey showing buyer sentiment was the lowest in the survey’s 26-year history.
“Unequivocally up in the survey was the view that mortgage rates would rise over the next year: the net balance expecting higher interest rates was the highest in history,” Tuffley told Stuff.