Responsible Lending? I wonder….

[Logen Ninefingers]

The banks increased their Stress test rate as the rates were rising from memory.
If they had a stress test rate of say 8% when rates were 2-3% the same people would also be crying foul.
No body really knew when and how high rates could/would go.

So who stuffed up then in your opinion?

[Aaron]

So who stuffed up then in your opinion?

No one stuffed up. Other than maybe Adrian Orr and central bank monetary policy.

Can we agree the RBNZ low interest rates and easy money as well as excessive immigration were largely responsible for excessive speculation in housing. Kiwis borrowing more and more to buy houses off each other. It happened in Ireland in the GFC, seemed stupid then and might appear stupid now unless the RBNZ drops rates and pushes house prices up again in which case they are geniuses, it is a gamble on central bank policy either way.

People saw prices going up 10-20% a year so wanted to jump on the band wagon as people do in speculative mania. Sadly for the first home buyers they were not trying to make money but secure a future for themselves and their families as they saw home ownership being pushed beyond the reach of an average salary earner. They took a chance and it has not paid off YET.

They made their choices and took the risk that property might not increase every year at 10-20% and that interest rates might not remain at historically low rates forever.

People should stop whining and take responsibility for their actions. That said I have not taken my own advice and have been angry at Adrian for years because I did not load up with excessive amounts of debt and accept unreasonably low yields. Mostly because I thought the RBNZ would act responsibly. I was angry because I would have been a lot richer for doing so.

If anything the media should be looking at inflation targeting and find the study that proved it was a good idea in the first place, because I can't.

We should also question if printing money (capital) makes us richer or poorer and if suppressing the price of capital (interest rates) results in better decision making when allocating capital.

Do you reward investors or speculators??? Or perhaps provide stability so that people can make decisions without having to factor in inflation.

This is the Share Trader website so I suspect the answer is speculators.

[Jay]

No one stuffed up. Other than maybe Adrian Orr and central bank monetary policy.

Can we agree the RBNZ low interest rates and easy money as well as excessive immigration were largely responsible for excessive speculation in housing. Kiwis borrowing more and more to buy houses off each other. It happened in Ireland in the GFC, seemed stupid then and might appear stupid now unless the RBNZ drops rates and pushes house prices up again in which case they are geniuses, it is a gamble on central bank policy either way.

People saw prices going up 10-20% a year so wanted to jump on the band wagon as people do in speculative mania. Sadly for the first home buyers they were not trying to make money but secure a future for themselves and their families as they saw home ownership being pushed beyond the reach of an average salary earner. They took a chance and it has not paid off YET.

They made their choices and took the risk that property might not increase every year at 10-20% and that interest rates might not remain at historically low rates forever.

People should stop whining and take responsibility for their actions. That said I have not taken my own advice and have been angry at Adrian for years because I did not load up with excessive amounts of debt and accept unreasonably low yields. Mostly because I thought the RBNZ would act responsibly. I was angry because I would have been a lot richer for doing so.

If anything the media should be looking at inflation targeting and find the study that proved it was a good idea in the first place, because I can't.

We should also question if printing money (capital) makes us richer or poorer and if suppressing the price of capital (interest rates) results in better decision making when allocating capital.

Do you reward investors or speculators??? Or perhaps provide stability so that people can make decisions without having to factor in inflation.

This is the Share Trader website so I suspect the answer is speculators.

What he said!