Christoph Schumacher

If you fixed for 30 years, that warning around wouldn't bother you because the

your interest rates would be fixed so it's quite a unique space we are in with extremely short time frames for fixing mortgages and for something as important as a house the biggest decision you'll probably make a spending decision in your life i find that let's say a bit uncomfortable

First of all, if interest rates go up, house prices tend to fall because it becomes more expensive for people to borrow.

If you buy a house and you need to borrow money and your interest rates have doubled, you're paying more.

It'll cost you more to finance that house.

And given that your income probably won't catch up with it, banks will be very conservative and give you less money simply because you need to be able to service the higher interest rates.

And that normally trickles through as more pressure

on the housing market, that houses don't sell as quickly because people struggle more with getting the finances they need and house prices tend to come down.

So normally we see interest rates going up, the housing market slowing down.

And that's exactly what we saw in recent years when interest rates were super high because inflation was high, the housing market slowed right down and prices dropped.

Well, first of all, interest rates could mean money owing on credit cards.

And New Zealanders owe a whole lot of money on credit cards.

In the Western world, we are right at the top of how much we own.

So that is a bit of a spiral in itself, because if you have less disposable income, because

your mortgage rates go up, you might struggle in financing through credit cards, which is very expensive.

So that comes back and bites you a second time for that spending.

It has something to do with businesses themselves, how much they end up paying for investments and for their businesses.

That has ripple effects.

If that slows down, the economy slows down, which always ends up

in some more redundancies.