Hundreds of thousands of homeowners are in for a rude shock as low rates secured two years ago, during a mortgage price war between the banks, come up for renewal.
Back in 2004, homeowners scored rates as low as 6.95% fixed for two years and now $40 billion of those mortgages are coming up for renewal at a time when there is no price war.
This means a hit in the pocket for about 250,000 New Zealanders such as Lynne Speir, who faces another $100 a month on her mortgage bill.
"On top of everything else it's huge," says Speir.
"We have not prepared because you just don't tend to think about it...you just think when you get the letter saying it's going to happen that's when you think of it again."
Going onto a new two year fixed rate is estimated to set back an average mortgage holder up to $90 a month.
Mortgage brokers are advising homeowners to shop around because the rates can vary. But experts say there is little point in hoping for another mortgage war.
It is now more expensive for banks to borrow money from overseas and they have learned from driving down rates in 2004.
"The lesson learned from two years ago is that you force your competitors to follow and there's really not much gain so other forms of marketing will be the optimal strategy," says Victoria University Economics Professor John McDermott.
