“Mortgage interest payments remain high, and continue to make a significant contribution to living costs for many households,” consumer prices manager James Mitchell said.
Interest payments increased 26.7% in the 12 months to the June 2024 quarter.
The data showed beneficiary households had costs up 4.5%, with rent rising 5.1%, private transport increasing 12.8% and interest payments up 25.2%.
Stats NZ said rent took up 29 % of beneficiary household expenditure, compared with 13% for an average household.
Superannuitant households had costs up 4.6%, with insurance climbing 19.8%, private transport rising 12.9% and rates up 9.7%.
For the highest-spending households, costs were up 5.6%, driven by a 27% jump in interest payments, private transport up 12.9% and insurance increasing 16.5%.
ASB economist Kim Mundy said interest and insurance were putting the most pressure on the highest-spending households’ costs.
She said interest rates were likely to keep the household cost price indexes higher than the CPI for now.
“We don’t expect the effective mortgage rate will peak until early 2025 as there are still households out there who will roll onto higher mortgage rates in the coming months. And when official cash rate cuts do come, that can take a while to flow through to a lower effective mortgage rate, given that most households tend to fix for one or two years.”
Council of Trade Unions policy director and economist Craig Renney said: “In terms of what’s the cause going on here, it’s very much mortgage interest – that’s because we’re measuring incomes rather than debt. Higher-income households, when they own property, tend to be more highly geared.”
He said historically, until the most recent escalation of interest rates, costs were increasing faster for beneficiary and superannuitant households.
“As that [interest rate increase] reverses we’ll probably go back to the story of costs being higher for those on low incomes. It costs a lot of money to be poor. That will likely see a return to that story.”
