27 Jan 2017

Get ready for higher interest rates, borrowers told

6:46 pm on 27 January 2017

Finance Minister Steven Joyce is warning heavily indebted borrowers to prepare for higher interest rates.

An auction sign outside a house for sale in Auckland.

People should be careful about what they pay for a property, Finance Minister Steven Joyce says. Photo: RNZ / Claire Eastham-Farrelly

The benchmark cost of borrowing is at an historic low of 1.75 percent, but Mr Joyce said it would not last forever.

Some fixed-rate mortgage costs have already gone up.

Mr Joyce said people needed to ensure they could cope with higher interest bills.

"People buying houses should be aware that even though they're very low, these interest rates at the moment, that makes the mortgage look affordable, don't think of your mortgage now, think of your mortgage in five years' time."

He said people should be aware of the potential risks of paying too much for a property, particularly in Auckland.

Part of his job as finance minister would be to remind them about the risks of paying too much for a property, he said.

The number of houses being built was gradually rising, and that would slow price growth.

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