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Dr_Who
16-09-2008, 09:23 AM
Should we leave it floating or fix it?

duncan macgregor
16-09-2008, 10:07 AM
Should we leave it floating or fix it? If you can afford to gamble leave it floating if not fix it. Times of turmoil coming up with finace houses going under who knows what to expect. macdunk

Crypto Crude
16-09-2008, 11:02 AM
falling interest rates are a sure thing...
If your not into sure things, then go fixed...
;)
.^sc

lakedaemonian
16-09-2008, 11:11 AM
I'm a big fan of fixed...I like knowing exactly what my outgoings are.

The best part is that when gearing and loan duration is very conservative.....the difference is ALMOST negligable

Dr_Who
16-09-2008, 01:54 PM
ASB is predicting another RB 50 point cut in OCT. Maybe a good idea to float till the oct RB annoucement?

Crypto Crude
16-09-2008, 03:29 PM
definately floating for the next year...
;)
.^sc

AJ
17-09-2008, 12:02 AM
Are the banks actually dropping the floating rate at the moment. This is 0.75% in a couple of months and I haven't see a large move in many rates at all yet.

Although I haven't been keeping the best watch on it.

Dr_Who
17-09-2008, 06:32 AM
With global financial market turmoil I can see our RB dropping rates another 50 points in Oct.

CAM
17-09-2008, 09:47 AM
Just had a look at ASB site....as an example

Floating rate currently 10.25%
Fixed one year 8.95%
Difference 1.3%
Are floating rates going to come back by more than 1.3% in the next year?

Maybe fix for a year then re evaluate...or wait until October announcement then fix?

Probably depends on the size of your mortgage as to how much the potential savings might be.

I like to know what I am paying back....just a personal preference when my main income is a fixed salary.

discl...don't currently have a mortgage

peat
18-09-2008, 08:48 AM
Westpac were 10.95 floating and didnt budge when the OCR came down 25bp but have supposedley lowered the rate to 10.45 now the RB lowered another 50 bp - but we are yet to see it. For some reason they wait for a while until various internal processes take place and notification of customers. Haha I reckon this is just a cunning plan to ream us for a few more weeks. Take the rates down straight away I say, its just the flick of a switch after all.

I was forced to renew in April and took out a 1 year at 9.7 for the fixed component (I think that was the highest they went to - but I had no choice to wait). But although rates have started to head down since then I'm not overly confident they will go to low with the credit crunch still gathering momentum.

The big question is inflation or deflation?

lakedaemonian
18-09-2008, 09:41 AM
Westpac were 10.95 floating and didnt budge when the OCR came down 25bp but have supposedley lowered the rate to 10.45 now the RB lowered another 50 bp - but we are yet to see it. For some reason they wait for a while until various internal processes take place and notification of customers. Haha I reckon this is just a cunning plan to ream us for a few more weeks. Take the rates down straight away I say, its just the flick of a switch after all.

I was forced to renew in April and took out a 1 year at 9.7 for the fixed component (I think that was the highest they went to - but I had no choice to wait). But although rates have started to head down since then I'm not overly confident they will go to low with the credit crunch still gathering momentum.

The big question is inflation or deflation?

My GUESS is an effort by Reserve Bank to ATTEMPT to inflate JUST enough to keep property prices from crashing much further......what that requires....I have no idea :)

If I could wave a magic wand I'd want to see property prices come back another 10-ish % combined with some wage inflation to get the house price multiple a bit closer to the mean.

See the Kiwi drop to about 60 cents to the USD to push exports and slow imports

Hopefully we don't see TOO much inflation, TOO big a hit to the Kiwi, and TOO big a hit from energy prices resuming their climb.


What also worries me is:

If RBNZ continues to drop interest rates, is there a guarantee the banks will be even be ABLE or WILLING to pass along those interest rate savings to the overindebted public?

Could we see a mini version of Japan's now multi-decade property and banking crisis?

Dr_Who
18-09-2008, 12:40 PM
Kiwibank gives the best rates. Have a look at their site.

For investment properties, it is best to leverage for tax benefits.

duncan macgregor
19-09-2008, 05:35 AM
In times of tumoil fix the rate. I fully expect during this crash that banks will raise their interest rates. Why try trying to save a few bob gambling into the unknown in this increasingly hostile environment. If i am wrong you lose out on a few bob, against risking it and losing the lot. Interest rates will rise thats my opinion. Macdunk

peat
19-09-2008, 06:56 AM
thats an interesting opinion MacDunk and one I respect given your recent calls.... although I only took a 1 year fixed out I am vaguely concerned that although we have a downturning economy here in NZ with the RB easing the US will cause some sort of global hyperinflation with Helicopter Bernanke at the helm. At any rate I have until next April to consider my options and the picture may be clearer then.


http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10532910

Jay
19-09-2008, 07:02 AM
Remember that most banks get a lot of their funding for mortgages from outside NZ.
Therefore the RBNZ dropping the OCR won't necessarily mean a drop in fixed rates.

TSB and Kiwibank may be an exception, though you did see them move their rates either when the first .25% drop by the RBNZ, as far as I was aware.

peat
01-03-2009, 09:06 AM
In times of tumoil fix the rate.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10559268 (http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10559268)

Lots of people capitalising their break fees.


Having only fixed for 1 year last April I didnt need to break and have now locked 2/3 in for 5 years with an increased amount floating. Quite possibly more deflation to run its course so even if the fixed rate isnt the lowest it will be, it is historically and relatively low.

Low, and certain seems good to me

cantab
01-03-2009, 09:03 PM
Tony Alexander Chief Economist BNZ

"Looking back at the usual question here about what I would do as a borrower – for a home mortgage – I would still be inclined not to take one of the 3-7 year fixed rates yet. The chances of achieving my desired 5.5% rate for five years have pulled back but I would still hang out for a rate below 6%."

http://www.bnz.co.nz/binaries/w260209.pdf