Cost of living: Bay of Plenty middle-income families describe struggle to make ends meet

Horrendous, impossible and stuck. That is how middle-income Kiwis describe their plight as they battle hefty home loans, insurance costs and grocery bills. Bad mortgage debt has hit nearly $2 billion and KiwiSaver hardship withdraws have doubled as families struggle with higher living costs. Carmen Hall reports.

“I lie awake at night worrying about money.”

That’s how a working mum, who shared her story on the condition of anonymity, feels as her living costs soar.

She says she and her husband have good jobs but a mortgage payment increase of $300 a week and “horrendous” insurance hikes have “tipped them over the edge”.

“You just have to find the money … Now I am looking at paying a higher excess on my insurance and I’ve got my fingers crossed nothing happens. Normally I roll everything over but now I’m lowering my coverage.”

Many Kiwi families are on the edge as the cost of living continues to rise. Photo / 123rf

She says the worst-case scenario could be selling their home.

“It’s not fun thinking about money and putting your big-girl pants on, but I have to be really serious about it.”

The family is living week-to-week and now their children are starting to worry.

“It’s just hideous. We are the new working poor.”

Australia calling

Levi TeUa may move his young whānau of five to Australia because the “cost of living doesn’t seem to be going down”.

The attraction is higher-paying jobs and more opportunities for the stay-at-home dad and his working partner.

They spend $650 every week on rent and about $300 on food while power and internet bills are paid in instalments.

“We are always having to look ahead of time so we aren’t caught off guard with any surprise [costs]. There are moments when we are a little downhearted as saving up for anything is starting to become impossible with the cost of living.

“But when I look at the Rotorua pages on Facebook, reading comments of people truly struggling, I know I’ve got it good, you know.”

Needing overtime to survive

Donna Wilson says making ends meet is “much tougher” and she can see “no end to it”.

Working families like hers have always struggled, “stuck” between low-income and high-income workers, she says.

“It used to be a choice if we worked overtime – now we need it to survive. It is really bad as I believe it’s important to have a work-life balance.

“I’ve cut back on a lot of things. I’m okay, just, but there are so many people out there struggling.”

Her mortgage payments have doubled alongside rates and insurance hikes. Wilson works, has adult children and her husband is retired.

House, tiny home, flatmates and side hustles

Zac Warren-Brown, who works at Bay of Plenty Times and Rotorua Daily Post publisher NZME as a senior media specialist, says his mortgage with partner Daisy has jumped by $437 a fortnight.

“We’re in a fortunate position to cover it but I can imagine for a lot of people it wouldn’t be … It’s not easy. Food and gas and everything is going up, making it difficult.

“We’re just finding ways to make ends meet at the end of the day.”

Daisy Warren and Zachary Brown bought their first home in Tauranga in 2021. Photo / Mead Norton

He does not regret paying $698,500 for their house in 2021, which was big enough for flatmates. The couple have added a tiny home that could fetch $350 to $450 a week in rent.

“That should make a massive difference.”

Warren-Brown is also involved in two start-ups. Ceeka is a UK-based streetwear marketplace selling high-end clothes through its app while yet-to-be-launched Cartreel.com is a reel-based social shopping app to browse, research, review and buy products in New Zealand and Australia.

Budgeting the ‘buzzword’

Mortgage Supply Company mortgage adviser Sam Burnett says budgeting is “becoming a common buzzword” and most clients are very aware of expenses.

The high-interest rate environment is curbing spending for most.

Sam Burnett from Mortgage Supply Co.

“I’m noticing a reticence from clients to push their budgets to the limit.

“I am having numerous conversations with clients on how to restructure their home loans to ensure they are on top of things and keeping costs as low as possible.

“Getting good advice and structuring the loans correctly is critical.”

Interest-only options

Rapson Loans and Finance financial adviser Brooke Reynolds has recently refinanced clients to another bank, extending their lending slightly with a temporary interest-only rate providing short-term relief and a cash contribution covering legal costs.

She says that, when rates are lower, they can structure the loan to be paid off in the same timeframe without costing more overall.

She encourages clients to review all expenses such as gym memberships, power and internet providers and general insurance, and have “robust conversations” about structuring lending from the start of the loan.

Rapson Loans and Finance co-owner Brooke Reynolds. Photo / Alex Cairns

“There are things you can do such as slightly increase your repayments at the outset which builds a buffer in your fixed loan.”

This buffer could be useful if a client needs a repayment holiday.

“They can also reduce their weekly, fortnightly or monthly payments rather than stop them to give some relief until the buffer is all used up.”

More debt is not the best solution but sometimes works out cheaper than being forced to sell assets in a low market, she says.

Withdrawing KiwiSaver for hardship is another option for people behind in repayments.

‘Sometimes we just can’t help’

Rapson Loans and Finance financial adviser Tristan Hewett is having some challenging conversations with clients coming off mid-2% to high 6% loans.

“This, coupled with rates and insurance increases, is meaning some people are really struggling to make ends meet.”

Rapson Loans and Finance co-owner Tristan Hewett. Photo / Alex Cairns

Rapson can run numbers and provide different solutions to reduce loan repayment costs, he says.

“It does depend on the people’s situation and sometimes we just can’t help.”

However, they can still work through the situation and make suggestions.

KiwiSaver hardship withdraws soar

New Zealanders struggling with the cost of living have been tapping into their KiwiSaver accounts in greater numbers.

Inland Revenue data shows 3700 people withdrew savings for financial hardship reasons in April, compared with 1820 last April, RNZ reported. Combined withdrawals hit $30.1 million, up from $14.1m in 2023.

Hardship withdrawal numbers have exceeded first-home withdrawals since November, reversing the previous trend.

David Callanan, general manager of corporate trustee services at Public Trust – a KiwiSaver supervisor in charge of approving hardship withdrawals – told the Herald last month it was seeing more events that people were no longer able to “ride out” because of higher living costs, especially housing.

Mortgage arrears and rents rise

Bad mortgage debt has hit nearly $2 billion as banks seek to identify struggling borrowers.

Reserve Bank figures show that, at the end of April, $1.9b in housing lending or 0.5% of the banks’ housing debt was non-performing.

A spokesperson says most households with mortgages have rolled on to higher interest rates and banks are positioned to provide support.

“They have assured us that they are taking proactive measures to identify and reach out to borrowers who may be in need of assistance, offering tailored solutions to help them effectively manage their debt obligations.”

Non-performing loans include those more than 90 days past due, or where the bank has reason to believe the borrower will not meet repayment obligations.

The latest median weekly rent figures from Trade Me revealed that, in April, the Bay of Plenty was the most expensive region to rent as the median weekly rent reached $690, $10 more than in Auckland.

At the time, Trade Me property sales director Gavin Lloyd said it would be unsettling news for Bay renters, coming on top of “record highs”.

Carmen Hall is a news director for the Bay of Plenty Times and Rotorua Daily Post, covering business and general news. She has been a Voyager Media Awards winner and a journalist for 25 years.