'We've lost half our deposit': About 4000 first-home buyers owe more than their homes worth
Rising interest rates are not welcome news for most borrowers, but they hit especially hard for those who are paying off a home loan on a house that is now worth less than they paid for it.
Rising interest rates are causing significant financial strain for first-home buyers, particularly those who owe more than their homes are worth. Cotality's chief economist, Kelvin Davidson, estimated that around 3600 households nationwide are currently in negative equity. Most of these households bought properties during the peak of the market in late 2021 and early 2022.
Prices have since dropped by about 17 percent nationally, with some regions experiencing declines of over 20 percent. Many buyers bought with less than the recommended 20 percent deposit, which contributes to the negative equity situation. Some buyers have shared their personal struggles online, expressing worries about selling their homes, financial losses, and the impact on their mental well-being.
Experts advise those in negative equity to continue making mortgage payments and seek professional advice to manage their situation. While falling house prices may deter investment, the issue primarily affects individual financial circumstances rather than the broader economy.
Written by urgent.news from RNZ Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
