Almost half of all Auckland first-home buyers are labouring under home loans at least five times greater than their yearly incomes, new Reserve Bank data shows.
Budgeting groups are warning young buyers that overextending themselves financially can lead to anxiety and health problems.
First-home buyers were already Auckland's most active buyer group as they last month snapped up 27 per cent of all new home loans offered by banks.
But with home loan interest rates plunging to new record lows each month, some pundits were tipping even more aspiring home owners to take on giant debts to try to get a foot on to the property ladder.
Twenty-nine-year-old Joanne Hohua knows how much sacrifice that takes.
She and husband Isaac, 31, paid $715,000 in March for a family home in South Auckland's Pahurehure suburb.
With the help of Loan Market mortgage advisor Megin Wilton, the couple secured a bank loan despite having a small deposit.
But their home loan is now about five-times greater than their salary - and to pay it off not only does Hohua have a job but her husband works 70 hours a week.
"To me that's still easier than renting because the money is not dead money going to someone else's mortgage, but not everyone wants to work 70 hours," she said.
And Hohua is convinced her family aren't alone. A near decade of skyrocketing Auckland house prices has meant home values have at times been close to 10 times higher than the typical city salary.
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"Every house you are purchasing is at least over $600,000 in Auckland, so I'm guessing most people under 30 would be facing home loans five-times higher than incomes," she said.
Tom Hartmann, managing editor of the Commission for Financial Capability's money guide website Sorted, said while it was recommended that housing costs should be kept to 30 per cent of your budget, it was impossible in markets like Auckland.
"People make much bigger sacrifices in order to buy a house, and for some it's worth it," he said.
"Other people will find the stress from a large mortgage is heavy and leads to anxiety and can even impact their health."
He said the commission promoted home ownership as a way for Kiwis to "grow their wellbeing" over the long term, provided they didn't overextend themselves.
Home buyers also needed to have their eyes open to the real cost of a home loan.
The commission website's mortgage calculator showed home buyers taking out a $600,000 home loan on a 30-year term at 5 per cent rates would end up paying an extra $558,000 in interest payments for a total loan cost of $1.16 million.
However, they could greatly reduce the overall cost of the loan by shortening the repayment time.
For instance, if the above home loan term was reduced to 25 years, a home buyer would pay an extra $200 a fortnight in repayments but save $100,000 overall in interest payments, Hartmann said.
Despite fears of more first-home buyers taking on unmanageable debts, Nick Goodall, head of research for analysts CoreLogic, said most borrowers were well placed to pay off their mortgages.
This was because 85 per cent of all first-home buyers securing home loans had saved a deposit that was at least 20 per cent of the value of the property they were buying.
And while interest rates were currently low, banks were "stress testing" borrowers to ensure they could continue paying off their home loans even if rates went as high as 7 or 8 per cent, Goodall said.
Mortgage broker Kris Pederson said rather than taking on too much debt, stress testing was actually stopping first-home buyers who could afford to buy from accessing home loans.
Banks were so stringently reviewing the spending records of those applying for home loans that even high income earners were being rejected if they didn't have a solid track record of saving.
It was almost a case of cutting out the lattes and avocado toasts until the bank approved your home loan and then enjoying them again later because getting the bank's approval was the hardest part, he joked.
Century 21 real estate agent Liam Collett also sensed caution among buyers.
"First-home buyer levels are up a bit at the moment, but at the same time people don't want these big, massive huge mortgages," he said.
"So I'm seeing a lot more people investing out of Auckland."