Scary times for some home-owners, with ANZ the first to react following last week's record OCR rise.

It's increasing its home loan and deposit rates, after the OCR was lifted to 4.25 percent last week.

ANZ expects house prices to continue dropping until mid to late next year, falling 22-percent from their peak last year.

But the New Zealand Institute of Economic Research is forecasting a lower interest rate track of 5 per cent.

Principal economist Christina Leung told Mike Hosking many households are rolling off fixed term mortgage rates of about a 2 per cent rate to something significantly higher.

She says it's expected as they face higher mortgage repayments, they'll start to rein in spending,  slowing the broader economy.

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