1 in 3 homeowners will be over 65 before shaking their mortgage
Despite some of the lowest mortgage interest rates since the 1960s, most New Zealanders are not taking advantage of the situation to pay off their mortgage faster.
Craig Herbison, BNZ’s Director of Retail and Marketing says despite interest rate cuts and property prices making headline news daily, as a nation we’re still taking a ‘she’ll be right’ approach to mortgages even though we have the lowest interest rates in 50 years.
“If you leave your mortgage to sort itself out, you could well be working long into your retirement. Our research* found almost a third of people will have a mortgage at 65. My view is that this figure may well increase, especially as the impact of rising Auckland house prices takes effect.”
“We looked at people’s reasons for paying what they do. There’s a very small amount (13 per cent) who are paying the minimum because it’s all they can afford. This means 87 per cent of New Zealanders have the opportunity to do more,” says Craig.
“Even something as simple as keeping the same repayment amount as the interest rate decreases will allow New Zealanders to pay off their mortgage faster. For a more startling figure BNZ’s tailored payments offer tells us that on a $300,000, 30 year mortgage at 6% p.a, BNZ can help you shred 11 years and $140k of interest off your home loan.**”
Craig says New Zealanders needed to take a long-term view and plan for the future they wanted and deserved. It isn’t just a case of thinking about the first home, but thinking about the last home too. The research found that of those surveyed who currently had a mortgage on the house they lived in, their ideal mortgage-free age was 56. However research showed that the reality was different, with most not being mortgage-free until they were 60.
The research also revealed that 53 per cent of New Zealanders relied on the value of their home to set them up in the future. A further 19 per cent planned to downsize or move to a different town or city to access the equity in their house to fund their retirement.
Read our tips on getting mortgage-free faster.
Go to shredmymortgage.co.nz to see how much you can shred off your mortgage.
*The BNZ Financial Future research was conducted by Colmar Brunton, a New Zealand Market Research Company. The purpose of the research was to highlight perception versus reality for New Zealanders with regards to money, mortgages, retirement and society to encourage a nationwide behaviour change. Online interviews were open to 18+ respondents from Tuesday 22 September to Thursday 24 September, surveying a total sample size of n=1,002.
**Compared to a standard table loan. Click here for more details.
This article is intended as a general discussion only, and is based on selective information which may not be suitable for your purposes. BNZ strongly recommends the recipients take independent legal, investment and financial advice prior to making any investment decisions.
