BNZ warns rising school costs and petrol prices are squeezing borrowers’ cashflow
Mortgage and finance brokers may find clients have less buffer this year as start-of-year expenses and higher fuel costs bite into household cashflow.
A new BNZ survey finds almost half of respondents felt more financial pressure at the start of the year than usual, as school fees, uniforms, transport, and childcare costs hit at the same time.
Anna Flower (pictured), BNZ executive, personal and business banking, said families were already feeling the strain before the latest jump in petrol prices.
“Households were already telling us they felt pressure from the usual start-of-year expenses before this spike in petrol prices fully flowed through,” Flower said.
That financial squeeze is also intersecting with a tougher rate environment, as the Reserve Bank has kept the official cash rate on hold at 2.25%, with major banks signalling that the risks for mortgage rates remain tilted towards further increases rather than cuts.
Start-of-year bills bite household cashflow
The survey shows 41% of respondents with school costs spent more than $750 at the start of the year, and almost a third spent over $1,000, with higher outlays in Auckland.
Many were caught off guard: 44% said the bills were larger than expected and the same share reported they were harder to manage than a year earlier. A third of households said they were rethinking their financial plans for the rest of the year, and nearly as many expect next year to be tougher again.
Fuel price surge adds to pressure on budgets
BNZ’s markets team noted crude oil prices jumped sharply through March, with refined fuel costs rising even faster. Flower said that surge leaves even less room for households to rebuild savings or get ahead.
ASB estimates the current oil shock will add about $55 a week to average household costs in 2026.
“When fuel prices rise on top of school, childcare, and other regular costs, it can leave people with even less room in the budget to recover, rebuild savings, or get ahead again,” Flower said.
With 24% of respondents delaying or changing spending on essentials such as groceries, healthcare, and transport, Flower said “That points to budgets with little room to absorb further increases in day-to-day costs.”
Bank economists also highlight that households are already being squeezed by higher pump prices and that confidence readings have softened again, factors that could limit how far the Reserve Bank ultimately needs to tighten policy.
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