Liam Patten paid just over $1 million when he bought his three-bedroom Pakuranga home in July 2020, fixing his mortgage on a two-year 2.49 per cent rate.
But when it comes time to fix his home loan on new terms next August, he's calculated that if interest rates are 6 per cent or above, he'll have to find at least $500 more per week in repayments.
"That's a massive increase," Liam said.
"On a minimum wage job, you are not getting more than $700 a week - so that's just about someone's whole paycheque."
And Liam isn't alone as many other homeowners potentially face rises just as high.
Bruce Patten - a mortgage broker with Loan Market and Liam's dad - said the latest predictions are for major bank rates to potentially climb to 6.5 per cent or even knock on the door of 7 per cent.
That could equate to the typical homeowner in Auckland paying $26,000 more per year or $500 per week.
That was based on the average Auckland home loan size of customers with Loan Market being $650,000 and rates jumping 4 per cent, from 2.5 per cent to 6.5 per cent, Patten said.
However, first-home buyers, who purchased their homes in the last two years could be facing jumps almost double that.
If they had borrowed loans worth about $1 million, a 4 per cent jump could equate to an extra $40,000 per year or $770 per week, Patten said.
Economists are sounding similar warnings.
They said "ugly" new inflation data came out on Tuesday that made it inevitable the Reserve Bank would have to hike rates more aggressively, commentator Liam Dann reported.
The latest Consumer Price Index Inflation for the year to September came in at 7.2 per cent - well above expectations of about 6.5 per cent.
Rising construction costs, rental prices and local government rates were among the biggest drivers pushing prices up in the latest quarter.
Some economists now see the Official Cash Rate peaking at 5.25 per cent - from current level of 3.5 per cent.
"There's no question now that the OCR will rise further," Infometrics economist Brad Olsen said.
For Liam Patten the rate hikes will be "massive" but also "manageable" because he has options on how to deal with them.
He has already built an extra room and living area in the garage of his three-bedroom Pakuranga home, effectively converting it into a four-bedroom property.
That allows him to live in the garage and rent out the rest of the house and draw in extra income to pay the mortgage.
However - with the prospect of a $500-plus increase in repayments in the future - he is now considering putting a tiny home out the back and living in that so he can rent out his own room.
Or even potentially moving back home with his parents and renting out his own room.
As an apprentice, he also expects to be a qualified electrician next year and earn a bigger salary.
Yet while young Kiwis had more options for handling higher repayments, it is tougher for older home buyers, Bruce Patten said.
His mortgage team had a client aged 56, who recently split from his wife and is in the process of buying another property.
However, because of his age, the bank was only willing to lend to him on a shorter home loan period, not the 30-year terms younger buyers get access to.
"At 56, he's also already past the peak of his earning potential," Patten said.
Harcourts St Heliers real estate owner David Findlay said another group of people finding rising rates tougher are some investor buyers of newbuilds.
He said these buyers had bought with the idea of making capital gains and then onselling.
But now that the homes are ready to be delivered one-and-a-half to two-years after the buyers signed up to buy them, interest rates had risen so much, the purchases were no longer viable and they were asking Findlay's team to sell the homes straight away.
However, Findlay said he is yet to see an uptick in mortgagee sales.
Kelvin Davidson from analysts CoreLogic said there were 28 mortgagee sales in the three months from May to July this year.
That is still far fewer than the 768 mortgagee sales during the same period in 2009 when the market was hit by the Global Financial Crisis.
Tom Hartmann from Sorted, the Government's money education site, advised those struggling to pay their home loans to seek help planning their budgets.
They should also immediately let their bank or lender know they are having difficulties rather than trying to "tough it out", he said.
Bruce Patten said those in trouble could also look to extend their home loan term so the weekly repayments are reduced.
Another option is to split their home loan up and fix it on different length terms, such as 1 year and 3 year terms.
That way the home owners are not forced to fix their entire mortgage at periods when interest rates are the highest, he said.
