Mortgage rates are going up in response to inflationary pressures and could rise one-to-three percentage points over the next few years, experts say.
That could drastically impact home-owners who have overborrowed on the expectation of increasing property values and continuing low interest rates, say financial analysts. But mortgage rates are still lower than two years ago, and analysts say they are unlikely to reach the heights of the global financial crisis when they touched 10 per cent.
"I am definitely a little bit nervous about how things might look in a couple of years' time," said Mark Lister, head of private wealth management at Craigs Investment Partners.
Those who had borrowed "up to their eyeballs" at the lowest rates seen in half a century, would be hurt by even a small rise, he said.
"There are always people who will overstretch themselves, and the temptation is higher when rates are lower. They may get a shock if they have to refix at a rate that is 2 to 3 per cent higher."
However, restrictions by the Reserve Bank and a generally more responsible approach by banks had mitigated over-borrowing risks, he said.
"For things to get messy you'd need to see interest rates going up, unemployment going up, the economy coming off the boil quite a bit, and immigration turning around. I don't think we're going to see that."
Mr Lister said the fact unemployment was heading towards 4.7 per cent - the lowest level since 2008 - was likely to result in pressure on employers to raise wage levels.
"But I don't think wages will rise drastically. Will it offset the interest rate rises we're likely to see? Probably not."
Realty Services chief executive Ross Stanway said the firm's mortgage finance arm Rothbury had seen a significant number of pre-approval loans put in place, which could reflect expectations of rate increases.
"But we're not seeing any sign of people being under pressure. And even if some people are over-leveraged, it's still a strong seller market. Volumes have come back, but prices have gone up. The perfect storm would be high interest rates and prices coming down, but there's no sign of that."
Graeme Leigh, who runs Rotorua's The Mortgage Centre, said the mortgage rate increases had been incremental.
"In terms of my borrowers, they do not seem to have been affected by the rate increases because in the larger scheme of things they have not been big increases," he said.
"The Rotorua property market is very strong now. And because the investors are relatively quiet it's given first home buyers more opportunity to secure properties, whereas previously they were fighting it out in the auctions with the investors from Auckland."
ASB chief economist Nick Tuffley said the Reserve Bank had finished cutting rates, now there were signs of broad-based inflation emerging.
"I would expect term interest rates to gradually grind up higher. Part of that will be the impact of Trump as his economic policies increasingly lead to inflationary pressure."
But even though they had lifted, mortgage rates in New Zealand were still lower than two years ago, he said.
"Yes they are rising, but from an extremely low level and they're not likely to rise that dramatically."