Mortgage Rate hits 60 year low - What does that mean to you ?

[Aaron]

Leverage up I say, I want to see a little bit more irrational exuberance. Am I right in thinking that the NZX50 is at an all time high. I am waiting for the crash but my patience is wearing thin. We need to see people getting carried away and then getting spooked into an overreaction on the downside.
You never know low yields could be here to stay, as this time "I think it could be different". Where are you beautiful black swan I await your arrival with bated breath.

More seriously though the difference between your dividend yield and interest rate could get quickly lost by capital depreciation if we had a market crash. But if you have done your research I guess you can hold for the long term. I personally won't be leveraging up just yet.

[Beagle]

yes, it is now tempting to gear into NZ dividend stocks. Maybe better than gearing into property in an overheated market. Out of interest, say you borrowed $200000 fixed for 5 years and spread over 5 blue chip dividend growth stocks who would be on the shopping list. My first pick would be AIA

What I'm finding a little annoying is that while the BNZ is happy to lend on new business at a fixed rate of 4.69% my revolving home loan account, (and that's after my professional association discount), is still 5.8%.
Classic case of a preferred client discount not really being a discount !! Yes I understand revolving credit is always more expensive than fixed rate special deals but the difference illustrates the excessive margins banks are making on revolving credit facilities in my opinion. I'm not really tempted to gear-up at 5.8%...that's probably a good thing as if it was 3.99% I think I'd find it hard to resist.

[Beagle]

Leveraging makes more sense when you're younger as you have more time to recover from a disaster if the SHTF.

[Xerof]

I have forgotten where I read it, but one very good commentator recently observed, the last time NZ went into recession, interest rates and the currency were going up..

Seems a lesson was learned from that experience

sorry, one might think this a little obscure....I meant to just add that for the young and the restless, a bit of leverage might be appropriate if you can pick up some cheap funding.

And, I think the next local black swan might come from the RBNZ raising the risk weighting for their residential mortgages to dampen supply of cheap loans from the trading banks. It needs to be directed to the productive sector IMV

[RGR367]

The latest rate would just mean I wouldn't get charged an usurious rate on my margin lending with ASB later on. Hoping it could come down soon 'cuz it's still at 6.95% at the moment if I'm not mistaken.

[Beagle]

HSBC just came out with a new special of only 4.49% for 1, 2 or 3 years fixed. The trend downwards continues...

[Beagle]

3.99% and the bank will tell you Kiora when you uplift your mortgage because nobody will be borrowing as the economy is in recession...you read it here first Don't listen to the Government propaganda that we're all right Jack....they're just trying to talk us out of the inevitable. Mortgagee sales on dairy farms coming left right and centre...front page news of the Herald today and this is just the very beginning of it.

[Beagle]

Well we're edging closer to the magic 3.99%, a rate of 4.35% in the market now and the Reserve bank will drop the cash rate tomorrow as sure as the sun rises so we are on our way...only a matter of time before one of the banks steals a marketing coup on the others and goes down there.

[Beagle]

And there we have it. Two banks now offering 3.99% mortgage finance as predicted. Shame its just for residential owner occupied homes as some of the dairy farmers could really do with the help from ultra low rates like that.

So is it finally time to gear up and borrow at 3.99% for "home renovations" (that's what you tell your bank to get the ultra low rate), but it happens to find its way into the share market in high yielding stocks paying 8% gross divvies or more ?