EnableMe co-founder Hannah McQueen says people don't realise how much power they have to shave years off their mortgages.

Mortgage reduction experts say many homeowners appear to have squandered nearly a decade of low interest rates.

Last week BNZ released a survey indicating 20 per cent of people with mortgages would extend the term of their loan to cope with rising interest rates.

The survey results dismayed Hannah McQueen from EnableMe, and Julian Travaglia from NZ Home Loans, both specialists in "coaching" people to pay off their mortgages faster.



"It's been a massive lost opportunity, and people will look back and realise how much further ahead they could have been than they are now," Travaglia said.



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Low interest rates provided an opportunity for people to go hard on their mortgages, and carve years off them, while the amount they had to pay in interest was low.

STUFF Many Welllington homeowners have made little use of a decade of low interest rates to reduce their mortgages.

In 2008, Reserve Bank figures show mortgage rates peaked with the average floating rate home loan costing 10.7 per cent in interest, and the average two-year fixed rate costing 9 per cent.

Then the global financial crisis struck, and by the end of 2010, floating rates were at 5.8 per cent, and two-year fixed rate loans were at 5.5 per cent.

This meant borrowers' minimum weekly repayments were lower, but it appears many homeowners did not use the extra disposable income that left to reduce their home loans.



"People weren't really so interested because everything seemed so easy," Travaglia said.



But he expected that to change as interest rates rose.



"Previously, it has been in times when the economy struggled, that we have done best," he said.

SUPPLIED NZ Home Loans chief executive Julian Travaglia expects a rush of business as interest rates rise.

Economists, like Infometrics are predicting an economic slowdown as higher interest rates bite, and homeowners tighten their belts and reduce spending.

McQueen was not impressed so many homeowners thought their best option was to push out the term of their mortgages.

"What that tells me is that people without a plan have no idea what they are doing," McQueen said.

"Some people think their only option is to make things easier to withstand a financial storm.

"They don't even know what they are capable of," she said.

"They don't realise their lack of financial health. It's not about earning more money. It's about taking control of your situation.

"The error that a lot of people make is that they can't see the areas where they are particularly bad with money. It's not like they have these huge vices like gambling," he said.

As a result, they failed to recognise the small ways they are frittering money that added up to large sums of money during any given year.

Travaglia was critical of the big banks' mortgage model, which had been to shovel loans out of the door, and not focus on helping borrowers develop strategies to make rapid progress on repaying them.

"The strategy of the banks has been to reduce their head count. It's not like they have consultants to phone people up to help them manage the increased cost," he said.

BNZ started a marketing drive last year around the idea it would help its customers "be good with money", including on "shredding the mortgage".

The BNZ survey indicated many small businesses should brace themselves for a downturn in trade, if mortgage interest rates rose as expected.

If mortgage repayments rose by $120 a fortnight, which was the pain point for many borrowers, 57 per cent said they would cut back on eating out and entertainment.

A further 42 per cent would spend less on clothes and shoes. Other lines of spending that would get trimmed included groceries (37 per cent), saving for retirement (35 per cent), insurance or power (30 per cent), gym memberships and sport (23 per cent), and essentials like healthcare (20 per cent).

A significant proportion of borrowers indicated they would have to make cuts in these areas of their spending, if their fortnightly payments rose by $80.