The official cash rate is currently sitting at 4.75 per cent, its highest level since 2008.

Until now, most mortgage holders have been sheltered from the impact of these sharp rises by mortgage rates fixed when interest rates were far lower.

Westpac senior economist Satish Ranchhod tells The Front Page podcast we can expect the real hit to arrive in the next few months.

“Over the next 12 months, about half of all mortgages will come up for repricing and many borrowers will face large increases in their mortgage interest rates - in some cases, around two to three percentage points,” Ranchhod says.

This will have a massive impact on the disposable income available to families tied into hefty mortgages.

“For the average household across the country, the increases in mortgage rates could see their fortnightly payments rising by about $500. And in most regions in Auckland, where house prices tend to be a lot higher, that increase will be more like $900 per fortnight. That’s a big bite at a family’s disposable income,” Ranchhod says.

The Reserve Bank’s use of the Official Cash Rate to cool down inflation has long been criticised as a blunt instrument, in that the impact is not felt uniformly across the population.

“The borrowers who face the largest increases will be those with the largest mortgages,” Ranchhod says.

“These tend to be families who are a little bit older and tend to have higher levels of income and savings, but we’ve also seen a large number of families getting into the housing market for the first time over the past couple of years. And those families could face some particularly tough financial pressures.”

Ranchhod says that these first-home buyers haven’t had the time to rebuild their savings rates and, in many cases, they would have seen the value of their houses dropping substantially.

Renters won’t be immune to the impact of this either, with the flow-on effects eventually making their way to the rental market.

“Even though renters aren’t directly exposed to those changes in interest rates, when landlords face increased costs, they’ll often pass those onto renters,” Ranchhod says.

“Over the past few years, we’ve already seen some big increases in rents, especially in our larger centres, and I think that’s gonna remain the case over the year ahead.”

So how much higher will interest rates go? What impact will the recent storms have on our inflation rate? Will these factors exacerbate wealth inequality in New Zealand and When will interest rates finally start to come down again?

Listen to the full episode of The Front Page podcast to hear Satish Ranchhod dig into these issues and more.

• The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5am. • You can follow the podcast at iHeartRadio, Apple Podcasts, Spotify, or wherever you get your podcasts.