Major banks around the country have recently increased the mortgage interest rates, and with the inflation going up, experts say that it is expected to increase further in the next few years.

The interest rates for a two-year fixed rate loan has gone up between 4.69% and 5.25%, while those for standard floating mortgages for all banks are starting at least at 5.4%.

ASB and Kiwi Bank raised the mortgage rates this week after BNZ and ANZ after inflation rising up to 1.3 percent annually.

Industry experts are saying that these changes are not likely to impact homeowners much except those who have over-borrowed, expecting that the property rates will keep rising while the interest rates go down.

“The homeowners who already have a mortgage and if they borrowed to their maximum capacity today on lowest rates, they will be affected by the increasing repayments because of rising interest rates. Every homeowner or even buyer do their budgeting before they go into the mortgage, so this will affect their own budget because income is not going up, but interest rates are,” Raman Chauhan of R Jay Financial Services Ltd told Indian Weekender.

Although experts say that the rate will go up further, it is unlikely that it will reach up to 10%—the interest rate during the global financial crisis two years ago. The average rate for a two-year fixed rate loan was 9.34% then.

“I calculate that the interest rates will further go up in the next few months, and it will shoot above five per cent by the end of the year. The cost of borrowing from overseas has gone up and the same is being reflected on the mortgage rates, which has to be reaped from the homebuyers,” Nathan Saminathan of Mortgage Masters told Indian Weekender.

“The USA Federal Bank Governor said USA rate will rise gradually over a period of time, and the inflation is moving up. All these factors lead to the fact that the rate in New Zealand will also rise up and action for two to three years fixed-term,” he added.

Professional Financial Solutions Ltd’s Ravi Mehta advises homebuyers to break their loan to save some money or at least reduce the impact of the rising interest rates.

“[The] future is uncertain. One should try to break the loan into different parts and fix for differing maturities. It helps to diversify the risk. One will lose in some and gain in others.”