There are growing calls for improved financial literacy in the wake of concerns about the average New Zealanders lack of knowledge about how to manage their main source of debt their mortgage.
According to recent Reserve Bank figures, mortgage debt is currently at an unprecedented high of $217.5 billion, averaging more than $100,000 for every New Zealander.
In a statement, last month, the bank also highlighted a significant correction in the housing market as the main domestic risk for 2017 with concerns that the recent downward pressure on interest rates is about to turn.
With many Kiwis, likely to be facing high credit card debt levels after the Xmas season, New Zealand Home Loans CEO Julian Travaglia says theres real concern that therell be a lot of people getting into hot water not just the hot weather at this time of year.
The pressures we hear from our clients, is that increasingly people are finding it hard to make ends meet. While there has been talk of rate rises recently, and yes there will be a lot of people caught off guard, what is even more disturbing is the lack of awareness about the number one tool to reduce debt, how they structure their home loans.
What your average New Zealander fails to realise is that reducing the term of a loan is still the fastest way to reduce debt but instead everyone is focussed on the incremental increase they face with a rate rise.
As a response Mr Travaglia says there needs to be greater emphasis in education.
We have a duty to do better as a private sector and working with public agencies to educate consumers as currently as a nation we are paying tens of millions of dollars more than we need to in order to service mortgages.
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