Homeowners feeling the pinch are being warned they are only halfway through the ripple effect on mortgage rates, with the Official Cash Rate (OCR) now at its peak.
But one economist says with falling interest rates will likely come growing unemployment and slower wage increases.
The Reserve Bank on Wednesday raised its benchmark rate by 25 basis points - taking it to 5.5 percent - and said that was probably enough.
But it also signalled cuts would not come until the third quarter of next year.
It has been a record busy month for those behind the phone line at MoneyTalks, a free national budgeting advice service. Team lead Angela Smart said they have already answered 2000 calls, a whopping 30 percent jump on last month.
"This is a bigger call increase than when the cyclone happened in February," she said.
"This is now becoming a bit of a perfect storm of the fallout of that, plus cost of living plus OCR."
Smart said more people were calling in financial distress.
"They just say they don't know where to go next. That is the biggest issue, is they say, 'Yes, I've got debt, I feel overwhelmed, what do I do from here?'
"That's when we look at finding the right financial mentor, the right budgeting service that is going to work with them to step in between and have those negotiations with creditors."
The Reserve Bank on Wednesday raised its benchmark rate by 25 basis points. Photo: RNZ
For those counting the pennies going into their home loans, Squirrel Mortgage Brokers chief executive David Cunningham told Nine to Noon interest rates would remain high for some time.
"The monetary tightening policy cycle is firmly in play and it's only halfway through for households."
He said households with a little money under the mattress would do better than those who might be expecting a reprieve from high mortgage interest rates.
Interest rate now 5.5%, RBNZ warns no cuts until late 2024
Not just homeowners affected
Renters are also facing higher costs - some, including in Wellington, are moving home or going without to cut costs.
Cassandra said food had become unaffordable, so she moved home with her parents.
"Food has gone up. I'm unable to support myself with eating so I just have to not eat until I get home."
For Emma, a rent rise was the turning point for moving back in with her parents.
"You really have to give up the luxuries to be able to afford the basics. I had to move home because it was getting too expensive."
Week-long waits for help
Tim Maurice is the manager at Auckland Central Budgeting, where there's a week's wait to see a financial mentor.
"People are having to make changes to their spending to make sure they're not spending more than they're earning, to live within their means," he said.
"Food costs go up, petrol costs, mortgage costs, people have to make changes. We're finding people have to make those tough decisions."
Last month, people in financial hardship drew down $20 million of their KiwiSaver, double that in January.
Maurice said people are using the funds to claw out of debt.
"We're seeing more people using it to cover budget deficits, which is going to make retirement much tougher - but people don't have a choice."
Smart said one in 10 people who call for help with their finances did so before they are in financial distress.
"For those that had thought that they were able to hold out on those higher floating rates or interest rates until the end of this year, well it's now looking another six months on from there.
"Our message is be proactive. Reach out for help before it gets any tougher."
Cuts expected sooner
ASB chief economist Nick Tuffley told Checkpoint he was expecting the Reserve Bank to start cutting the OCR in the first half of next year, despite Orr saying it was unlikely before the end of 2024, or even into 2025.
"Yes, it does look like it will take that long to get inflation back down into the target band, but the Reserve Bank doesn't have to wait until inflation is down - as long as there's still probably enough pressure coming through."
Tuffley said it appeared Orr took into account the fact many mortgage holders were refix to higher interest rates, so the full impact of the OCR hikes over the last year or so was yet to be felt.
In the past, he said booming immigration had pushed up inflation - but that was not happening at present, with plenty of jobs to go around.
"On the flipside, wage growth wasn't as strong as expected. So potentially what we're going to see going forward is that we will see a lot more people available to work - not all of them will necessarily get work, and we'll see wage pressure start to ease back."
This would ease cost pressures on business, Tuffley said.