PDA

View Full Version : Interest Rates - Where to next?



foxysfolkfaced23
05-08-2009, 01:34 PM
Selfishly thinking of my own situation, that being that I have recently purchased my first house, I would like to know other people's opinions on the interest rate for the next 5 years.

I know it's impossible to know what will happen BUT still i'd like to see what others think will happen

Some think we are due for a rates explosion (perhaps double digit rates) in 2+ years due to huge govt spending now to prop up the economy.

Others think the economy is in such poor shape that rates will have to remain low for a long time yet to help the economy and any major increase in rates will kill our exports hurting us even more.

My personal opinion is that rates will rise sooner than people expect - maybe in the next month or two and i am tending to believe they could go higher quickly.

This being the case i'm thinking of fixing half of the mortgage for 5 years @ 7.95% and the other half for 2 years @ 6.09% - therefore if rates explode i will be protected somewhat, however if rates stay low then i can still reap some of the rewards.....

Dr_Who
05-08-2009, 02:50 PM
It is a hard one to pick.

It is certain there will be inflation down the track. This is evident by the commodities market running way ahead of us. Some commodities have put on nearly 100% this year. Keep an eye on those unemployment rate. Once unemployment levels off, then it is time to fix those rates.

The real question is when and not if. I am planning to review my mortgage and maybe fix for 3 or 4 years at the end of this year.

minimoke
05-08-2009, 02:53 PM
Up!

Don't know when or by how much and I don't fret it.

I've just changed bank and fixed 2/3rds at 6.09% for the longest term. The other 1/3rd is at 5.99% on a revolving credit loan. All with no bank fees.

I'll hammer the revolving credit over the next two years and not sweat the fixed. The revolving credit also gives me an immediate 5.99% net return on any spare cash I have. Obviously if interst rates do go up my return will be even better.

No-one can tell you what rates will be in 2 years or five years so its not worth worrying about. The main thing is to have a plan, make sure its manageable, monitor during the term and reassess when the term is up.

Casa del Energia
05-08-2009, 03:09 PM
Selfishly thinking of my own situation, that being that I have recently purchased my first house, I would like to know other people's opinions on the interest rate for the next 5 years.

I know it's impossible to know what will happen BUT still i'd like to see what others think will happen

Some think we are due for a rates explosion (perhaps double digit rates) in 2+ years due to huge govt spending now to prop up the economy.

Others think the economy is in such poor shape that rates will have to remain low for a long time yet to help the economy and any major increase in rates will kill our exports hurting us even more.

My personal opinion is that rates will rise sooner than people expect - maybe in the next month or two and i am tending to believe they could go higher quickly.

This being the case i'm thinking of fixing half of the mortgage for 5 years @ 7.95% and the other half for 2 years @ 6.09% - therefore if rates explode i will be protected somewhat, however if rates stay low then i can still reap some of the rewards.....


It's always a dilemma.

My 2cents.

I think inflation is going to be an 'issue' in 18mths - 2 yrs. (another commodity boom, soggy currencies due to 'quantitative easing' yudda yudda yudda.

So interest rates will go up -- and note that the longer rates from banks are quite a bit higher than the 18 mth & 2yrs rates so the banks are thinking along the same lines.

But it's all crystal ball so … I've just turned over two mortgages and set them for 18 mths. This may sound insane if I really believe inflation is going to take off at the end of it - but here's the reasoning;

If I can grab the best rates going, pay down as much as possible in that period AND inflation takes off - then it's a winning situation since high inflation reduces the real value of the 'rump' of the debt faster AND I've got a smaller residual 'rump' - so paying higher rates on it is not as painful as it could be.

I hope it helps to see what 'others' are doing and their reasoning for their actions.

foxysfolkfaced23
07-08-2009, 08:41 AM
I see that ASB has already put it rates up today

3yr 7.45%
4yr 7.95%
5yr 8.30%

I'm getting in contact with bank today to lock in a rate..........

peat
07-08-2009, 09:16 AM
yes bond prices for US 30 yr T bonds have been going down
(meaning interest rates are rising)

AMR
09-08-2009, 11:56 AM
Can soem of the more experienced investors here tell us what happened to rents during the last bout of hyperinflation we had?

fungus pudding
09-08-2009, 02:33 PM
Can soem of the more experienced investors here tell us what happened to rents during the last bout of hyperinflation we had?

They kept rising in spite of a price freeze and rent freeze.

CycleTrader
10-08-2009, 10:30 AM
I've been worried about the prospects for rising rates for quite a while and locked in 5 years at 7.5%. I know its a big call given the discount you can get floating but my concern is that when rates rise, they'll rise fast. At 7.5% we're still comfortable and still below the average for the last 20 years.

CT

neopoleII
10-08-2009, 05:47 PM
why would the floating rate rise?
its not like were in boom times..........
infact the sad times have only just begun in new zealand.
we dont manufacture much, our dairy produce is still slipping.
we are still massivily in debt.
peoples so call property wealth is still eroding.
and there is a trainload of service provider employment yet to hit the wall.
the nz$ is still high.
and property is still over valued for the next generation of home owners.
money is tight ...... not many borrowing, not many wanting to.
a huge number of oldies lost their next eggs, and cant pass on inheratences to the young...........
and the list goes on..........

just because fixed rates are rising means nothing at all to the floating rate
the problem is kiwis fixation on property speculation via fixed term loans.

beacon
10-08-2009, 05:59 PM
Interesting question. LT rates sitting over 8% in NZ is a scam, given global scenario. I expect rates to stagnate at these levels, though short term who knows...

Dr_Who
10-08-2009, 06:05 PM
The banks are screwing us as much as they can, cos they can.

The NZ economy is completely in the mercy of the banks and global institutions. Our dollar is too high, retail rates are too high, compliance cost too high... NZ economy is stuffed!

foxysfolkfaced23
11-08-2009, 06:55 AM
ASB put rates up on Friday. ANZ/National followed suit on Saturday. Westpac has just moved overnight. Kiwibank/BNZ still holding firm.

I fixed with Kiwibank yesterday - half for two years at 6.09%, half for 4 years at 7.40%.

My personal thought is that banks are basically making the floating/short term rates look too attractive for most people to turn down BUT they (the banks) know that they will be able to get them at 8.0%+ when they come off in 1-2 years time.

There is another reason/excuse that the banks push up interest rates and that is the cost of funding to the banks......which is the reason given for the latest round of rate hikes in Aussie - and hence the reason here too.

Interest rates have been dramatically lowered to spur growth & avert a major recession - it won't be long before the rates are put back to normal levels.

We rely on Australian banks for funding - where their house prices have not yet retreated and are still rising (big time bubble) - at least in NZ they came back 10%+ and have been pretty stagnant for 12-18 months - when Aussie rates rise/fall Kiwi rates are not far behind - so what happens in Aussie is important to us.

http://business.smh.com.au/business/commbank-lifts-fixed-rates-20090810-effh.html

However it all depends on your situation of course - since i am just starting my mortgage i am happy with my strategy. Others who have only a few years to go will feel floating/short term is the best especially if they really nail the principal at low rates.

Ptolemy
12-08-2009, 09:33 AM
My opinion is that rising i-rate will be a short-term phenominen that will catch out the fearful who will fix higher than they need ... long run there'll be little significant changes and possibly even a return to lower/lowish rates (below the long run norm) as the NZ economy recovers very slowly.

Interesting theory. Would appear to be in disagreement with most economic commentators who suggest that the massive worldwide borrowing programmes by governments (including NZ) will place upward pressure on investor funds and therefore interest rates. A glance at T-bill rates in the USA shows increases of 1% plus for 10 and 15 year bonds despite no change to official fed rates.

In NZ we have massive structural imbalances where our current account deficit is bloated by massive outflows to fund our debt based obsession with housing. Fitch have hinted at a credit rating downgrade. Any further shocks in the global financial markets may mean they carry through on the threat. Regardless of whether they do or don't bank funding costs are rising for 2 year plus rates.

Dr_Who
12-08-2009, 09:41 AM
We spend too much and dont save enough, hence we rely on offshore capital for funding. It is as simple as that.

Like a weakling in the playground, we are picked on by the bigger boys.

Ptolemy
12-08-2009, 10:20 AM
We spend too much and dont save enough, hence we rely on offshore capital for funding. It is as simple as that.

Like a weakling in the playground, we are picked on by the bigger boys.

Yup. You have summed it up much better than me.

The Great Gold Guru
12-08-2009, 11:29 AM
TSB's 5.99% 2Yr rate looks the value option to me in the market if you aren't comfortable sitting on a 6m roll-over strategy at 5.45-5.50%. I have $1.3m borrowings over 8 rentals , current weighted average duration is only 1.4Yrs and weighted average rate is 6.24% ( made higher by 1 mortgage being at 8.50% with 9mths and 1 at 7.75% with 15mths to run ) ... would like to get duration up to 2Yrs+ but I think to do that would be too expensive. I'd need to pay some 4Yr and 5Yr and I just don't think there is value in that at present. Better to stick 6m,1Yr and 2Yr all below 6% and roll-over at best rate when fixes come to an end. Certainly absolutely no interest in 5Yr money at 8.30% ... that IS EXPENSIVE !!

beacon
12-08-2009, 03:04 PM
Your tenants holding their chin up GGG? Would be interested to hear what your experience is. I hear only moans around, and growing ...

neopoleII
13-08-2009, 11:47 AM
floating rates are going down..........
why on earth would people want to fix into higher rates?????

oh yeah......... the percieved new property boom...... lol

foxysfolkfaced23
13-08-2009, 01:09 PM
maybe the banks want you to float or fix for less than a year.

but don't listen to me I only got a C in ECON101 :cool: - after my 2nd attempt :D (missed the exam first year)

having said that yes the rates curve is so steep that there really is no point fixing now for anything over 2 years unless you believe that rates are going to jump significantly

peat
13-08-2009, 06:17 PM
there are good reasons to fix (tho you've missed the boat to some extent by now)
I value knowing that my mortgage is (largely) fixed for 5 years as it allows certainty in budgeting and planning. Less importantly it costs less too as there is a admin fee each time you roll over.
But I also knew when I fixed it at 6.5 in April that this was historically a very low number. last time (in 2003) when I fixed at a similar level I never regretted it
Its seems to me that in NZ with our high interest rate premiums due to being a small indebted nation they will never go particularly low esp when you know the bank wants 3.5 and the country's premium is what ? 2 at least... so there is no chance in hell of them ever going below 5 , so to lock in for 5 at years at 6.5 seemed a sure thing as it gives me certaintly with no huge premium for that. dont think I would be fixing for 5 right now tho.

Dr_Who
14-08-2009, 04:20 PM
Anyone know in the details of the NZ banks offshore funding percentage and from which country?

I am trying to figure out if our fixed rates will follow the Aussie RB rates or US rates movement. It certainly doesnt follow our NZ OCR. NZ banks tend to laugh at our OCR rates.

neopoleII
14-08-2009, 05:47 PM
at a rough guess, 60 odd percent off shore funding originating from asian lands, mainly japan but probably a large portion from china.
not sure if this is correct, but did read about something like this.

The Great Gold Guru
15-08-2009, 10:25 AM
Beacon ,

Tenants are all good in the properties I manage myself ( 3 in Blenheim and 1 in Dunedin ). My 4 rentals ( actual 5 now after purchase yesterday ) in Wanganui are a little more work so I get them managed ( 7%+GST ) for me. I have just had 4 weeks empty on one which is the longest period empty for 3 yrs. Now rented at $10pw less than previous tenants but better quality tenant that should stay a while.

Demand good , be picky with your tenants. 1 of the properties in Blenheim and the Dunedin property have the same tenants now as the day I bought them , that makes for a very easy to manage investment. Interest rates down 4% and rents up 10% in the last 12 months also helps a HEAP !!

beacon
17-08-2009, 10:03 AM
Cheers mate. Thanks for a bit of your sunshine ...

neopoleII
14-09-2009, 06:25 PM
floating interest rates still dropping,
nz$ still rising,
unemployment still rising,
and the effects of a high dollar still to show themselves in NZ.
exporters must be really hurting..........
maybe a whole new lot of layoffs on the way,
are banks trying to hook new punters in the mini property bubble?

Goff saying he will back the nats in cap gains tax legisation.
this would slam a hammer on the property speculators........ (first time in history)

end result
property investment will be left for the true investor (longterm)
and property prices might stablise so that the average kiwi and the next generations
of kiwis can afford a home.

if the nats and labour can pull this off, and ringfence residential investment property,
this country has a hope of going forward.
in the meantime, our debt level is still increasing,

i wonder if the rising crime rate is related to the fact that most young and lower income earners cant afford the kiwi dream of owning a house and therefore feel dispondant, which leads to pesimissim and lack of future planning?

i know of young people today who lack optimizm because they see current home prices waaaay out of their reach and just resolve themselves to living today and getting what they can.
some young people (the ones who have totally lost hope) just go out take what they want,
re:: the rise in crime.

maybe the nats and labour can give hope again to the next generation of kiwis together by making a home affordable again.

as an example,
the typical house in south auckland is around $320k yet the typical south aucklander could never afford to buy it, and can only afford to rent it because of housing suppliments and working for families or dpb payments.
in the meantime the landlords are making profits via a miriad of tax manouvers.

fungus pudding
14-09-2009, 06:48 PM
floating interest rates still dropping,
nz$ still rising,
unemployment still rising,
and the effects of a high dollar still to show themselves in NZ.
exporters must be really hurting..........
maybe a whole new lot of layoffs on the way,
are banks trying to hook new punters in the mini property bubble?

Goff saying he will back the nats in cap gains tax legisation.
this would slam a hammer on the property speculators........ (first time in history)

end result
property investment will be left for the true investor (longterm)
and property prices might stablise so that the average kiwi and the next generations
of kiwis can afford a home.

if the nats and labour can pull this off, and ringfence residential investment property,
this country has a hope of going forward.
in the meantime, our debt level is still increasing,

i wonder if the rising crime rate is related to the fact that most young and lower income earners cant afford the kiwi dream of owning a house and therefore feel dispondant, which leads to pesimissim and lack of future planning?

i know of young people today who lack optimizm because they see current home prices waaaay out of their reach and just resolve themselves to living today and getting what they can.
some young people (the ones who have totally lost hope) just go out take what they want,
re:: the rise in crime.

maybe the nats and labour can give hope again to the next generation of kiwis together by making a home affordable again.

as an example,
the typical house in south auckland is around $320k yet the typical south aucklander could never afford to buy it, and can only afford to rent it because of housing suppliments and working for families or dpb payments.
in the meantime the landlords are making profits via a miriad of tax manouvers.


If you really think capital gains tax will help first time buyers and owner occupiers, have a look at what happened the last time silly Bill Rowling tried to dampen a housing boom with his silly spec. tax in the 70s. It immediately dried up the market leading to the biggest price explosion NZ has ever seen.
CGT hasn't helped anywhere in the world. It's a difficult tax to administer and it stops things happening - we're better off without it.

Dr_Who
14-09-2009, 06:56 PM
The notion that young people cant afford to buy a house these days are complete BS. There are plenty of places in Auckland that are very affordable out south and west. The problem with most young people these days is they want everything now and dont want to sacrifice for it.

Most young ones prefer to pay huge rent to stay in the nicer areas than to buy a affordable house in the not so nice areas. The live for today generation. I know, cos I have a few rental properties in both areas.

minimoke
15-09-2009, 11:18 AM
i know of young people today who lack optimizm because they see current home prices waaaay out of their reach and just resolve themselves to living today and getting what they can.
some young people (the ones who have totally lost hope) just go out take what they want,
re:: the rise in crime.

maybe the nats and labour can give hope again to the next generation of kiwis together by making a home affordable again.


What a crock of ****e. There is no god given right to own your own home - despite the governments best efforts at their own attempts at divine intervention.

Having dreams is great - but they should fall into either the "Fantasy" category" or be more realistic.

A person with the mental fortitude to turn to a life of crime because they can't buy a house is destined to never own a house and will probably end up in hock for all the things they felt they "must have".

Having a home is affordable. Its affordable for those who choose to sacrifice the baubles of modern consumerism and save a deposit. Its affordable for those who work to get an education and a job that pays more than mimnimium wage. Its affordable for those who are prepared to take a step on the property ladder and not expect to get to the top rung on the first go. Its affordable for those that choose to rent - owning a house is not a pre requisite for creating a home.

Ptolemy
15-09-2009, 12:21 PM
Having a home is affordable. Its affordable for those who choose to sacrifice the baubles of modern consumerism and save a deposit. Its affordable for those who work to get an education and a job that pays more than mimnimium wage. Its affordable for those who are prepared to take a step on the property ladder and not expect to get to the top rung on the first go. Its affordable for those that choose to rent - owning a house is not a prerequisite for creating a home.

Affordable on what basis? Certainly not a historical one.

Let's take the average property price ($346k), historical average interest rates (8%) and average wage ($46k or $725 a week).

Lets assume a 20% deposit (BTW do you know anyone on $46k who can save $70k whilst paying rent) - the mortgage payments on this loan would be $950 per fortnight or $475 a week over 30 years. This is before rates, insurance etc. Leaves about $200 a week for utilities, food etc. Doesn't sound possible - in fact I am pretty sure the bank would not loan on that basis.

Now I know you will come back with the following arguments - dual incomes, interest rates are not 8%, they could find a cheaper house etc.

Let's deal with these one by one:

- dual incomes - yes I will concede that most couple both work, but lets assume that at some point they want kids. For average salary earners the cost of childcare eats a good percentage of the wage. I sure helps the equation but also puts a lot of pressure on relationships and family life. At least some period out of the workforce should be budgeted for and once there are two pre-school kids it is marginal for average salary earners to pay for childcare.

- interest rates - yep no doubt they are lower than 8%. It would be a gamble to assume they will stay where they are for more than 12 months. Ceratinly based on yield curves the markets are expecting them to rise rapidly next year. 5 year fixed rates are at 5%. It is not inconceivable that interest rates could go higher than 8%

- cheaper house - sure, they could find a cheaper house. But they could find a more expensive one to. That is why the average wage and the average house price is used. If I used Auckland the average salary would be about $50k but the average house would be well over $400k.

By any international measure NZ property is overvalued and unaffordable. Only Australia has a more overvalued market (probably because of their first homeowner grant) - Case-Shiller housing affordability report supports this.

Who wants to be saddled with 30 years worth of debt?

This probably should have been on the other thread.

minimoke
15-09-2009, 01:02 PM
Affordable on what basis? Certainly not a historical one.

Let's take the average property price ($346k), historical average interest rates (8%) and average wage ($46k or $725 a week).


At least 5,878 people thought that buying a house was affordable last month.

Lets not take the average house - why should a person heading out on the property ladder expect to leap immediatly into an "average " house. Lets actually take a house that is affordable relative to a persons income. Heres's one in South Ackland(http://www.trademe.co.nz/Trade-me-property/Residential-property/Houses-for-sale/auction-237805252.htm) 2 bedroom for $185k). Or for another $100k what about this 3 bedroom (http://www.trademe.co.nz/Trade-me-property/Residential-property/Houses-for-sale/auction-234325368.htm). Sure they aren't average (cos' I don't know how we would define average) - but they are less than the $400k average reported by REINZ.

Lets not take your interst rates. Lets take 6.39% for two years and 5.79 to free up a bit of short term cash. It is of course wise to budget on increased interst rates and a drop in income - but look at the risks and weigh up if they can be taken.

Lets not take a 20% deposit - you can get a loan at 10%. That means on the two bedroom house above you need to find $18,500k. Now take out a pack a day smoking habit (there's $3,650 a year), the weekly lotto ticket (another $780 a year), that dozen of beer or bottles of wine each ($1,040 a year) and you already have $5,500 a year saved - thats only 3 1/3 years you have to save. Flag away that flat screen TV, that Subaru WRX and the coffees and that time drops even more. A real good investment might be a pack of condoms to stop you breeding until you have your mortgage sorted. A home is affordable if you want it.

And don't see debt as your enemy - its your friend. And theres no reason why it can't be a lifelong relationship.

The GrandMaster
15-09-2009, 01:31 PM
Most young ones prefer to pay huge rent to stay in the nicer areas than to buy a affordable house in the not so nice areas.

Yes I do prefer, and what is wrong with that? Where does it say that the meaning of life is to own your own home?

minimoke
15-09-2009, 03:14 PM
Affordable on what basis?
Here's another basis - because the Government reckons so. Today State Home tennants are going to be eligible to buy the house they are curretly living in. QV will value the home (nudge nudge wink wink) and Welcome Home Loans will get people up to a $350k loan.

So if a State House tennant is seen by governement as an ideal prospect for home ownership - others can do it as well.

beacon
16-09-2009, 01:34 PM
What a crock of ****e. There is no god given right to own your own home - despite the governments best efforts at their own attempts at divine intervention.

Having dreams is great - but they should fall into either the "Fantasy" category" or be more realistic.

A person with the mental fortitude to turn to a life of crime because they can't buy a house is destined to never own a house and will probably end up in hock for all the things they felt they "must have".

Having a home is affordable. Its affordable for those who choose to sacrifice the baubles of modern consumerism and save a deposit. Its affordable for those who work to get an education and a job that pays more than mimnimium wage. Its affordable for those who are prepared to take a step on the property ladder and not expect to get to the top rung on the first go. Its affordable for those that choose to rent - owning a house is not a pre requisite for creating a home.

Brilliantly put. But perhaps some people want something for nothing, and pronto if you will. I know of no investor, who hasn't put the hard yards in, nobody who has made no sacrifices, and nobody who wasn't patient...

Why do we wish to protect our young so. It is part of character building. maybe that's why the national character is slipping slowly. Anyway, if after 10 trillion US dollar lesson, the politicians still have not cottoned on to the fact that economic engines do not function when the property markets creak, God only knows if they ever will ...

Ptolemy
18-09-2009, 10:18 AM
Here's another basis - because the Government reckons so. Today State Home tennants are going to be eligible to buy the house they are curretly living in. QV will value the home (nudge nudge wink wink) and Welcome Home Loans will get people up to a $350k loan.

So if a State House tennant is seen by governement as an ideal prospect for home ownership - others can do it as well.

Hmmm. Do you think that the Government might have a vested interest here?

In terms of your affordability examples - your response was rather predictable I have to say. I can also find houses in Mataura for $60k.

On the interest rate - if you think that it is going to stay at 6.39% for the term of the loan then I think you are being a bit naive. Purchasers should at least budget on average.

So lets take your Papakura house - after borrowing $170k (lawyers fees, mortgage costs etc) at 8.25% (this is where the 5 year rates are currently at and so the market is telling us this is where they are going) the repayments on a reducing loan will be $755 per fortnight.

But now our average salaried worker needs to pay $100 in petrol and transport expenses to get into town and they can't fit more than one kid in the house even if they could afford one cos they are living in a two bedroom unit in Papakura.

I'll ask another question to you - if NZ is so affordable, why do international studies using the same methodology for all markets consistently find NZ and Australia as having the most unaffordable housing in the world.

minimoke
18-09-2009, 11:07 AM
In terms of your affordability examples - your response was rather predictable I have to say. I can also find houses in Mataura for $60k.
But can you find work there? I suspect there's a better chance of finding work in South Auckland.


On the interest rate - if you think that it is going to stay at 6.39% for the term of the loan then I think you are being a bit naive. Purchasers should at least budget on average. Of course rates are going to go up. Look at the risk and fix an appropriate amount for an appropriate term.



But now our average salaried worker needs to pay $100 in petrol and transport expenses to get into town and they can't fit more than one kid in the house even if they could afford one cos they are living in a two bedroom unit in Papakura.So your buyer did have two incomes before they decided to breed - shame they didn't save more between them to get a bigger deposit. Chuck in a single income and Working For Families and some cash is coming in. Why should I have sympathy for a person who aspires for a three bedroom house when their immediate need is for a two bedroom one. Get a floating rate on part of the mortgage, hammer it then breed again. Get your extra WFF and move to the three bedroom.


I'll ask another question to you - if NZ is so affordable, why do international studies using the same methodology for all markets consistently find NZ and Australia as having the most unaffordable housing in the world.I've never said home ownership is for everyone and I have been clear that there is no god given right to own a home. Horses for courses!

beacon
18-09-2009, 11:33 AM
if NZ is so affordable, why do international studies using the same methodology for all markets consistently find NZ and Australia as having the most unaffordable housing in the world.

Which studies in particular are you referring to. Undue Governmental Interference in market will result in NZ underpricing its housing stock for international investors. haven't we learnt a lesson from the sharemarket yet. How many NZ stocks do NZers own? How many big businesses? And then we cry when the Aussies milk us for dividends with their banks, waste management ...

minimoke
18-09-2009, 12:51 PM
I'll ask another question to you - if NZ is so affordable, why do international studies using the same methodology for all markets consistently find NZ and Australia as having the most unaffordable housing in the world.
Perhasp its because there is underlying value in NZ housing. If you compare with the USA which is one of the more affordable would you actually want to buy a house there. Go to Youngstown OH/PA - one of the more affordable in the world. You've got 14.2% unemployment - good luck gettign a job to pay your low mortgage for yoru cheap house! Conversely you have Kiwis reckoning the grass is greener on the other side of the Tasman - where housing affordability on the Sunshne Coast is rated worst in the world. Thats not stopping them moving and getting on with life.

Ptolemy
18-09-2009, 02:31 PM
I think my point about Mataura was exactly that. And by your own admission if you can't find income or your income is low then houses should be more affordable. Ergo, NZ houses are not affordable on an income basis. This is actually the basis of most of the surveys into house affordability. I guess you have read the same reports since I see you have quoted the most affordable place in the US from the report

http://www.demographia.com/dhi.pdf

I think we can agree that there are houses that people could afford to buy on the average salary if they are prepared to make sacrifices but that doesn't make NZ houses affordable. When I bought my first house in 1994 it cost me $185k in Sandringham. It was a 3 bed cottage. It was a first home buyer house and still is. I was earning below average wage and my wife and I with both pays and payrises and two flatmates were able to make short work of the mortgage - we paid it off within 6 years. That same house with minimal improvements has a GV now of 625k. That house is not in range for first homebuyers unless they have significant salaries and deposits - and then they will spend most of their lives paying it off.

I reiterate, housing is not affordable today. I don't know why you think debt is your friend? It is just a different form of slavery - to the bank rather than plantation owner.


Beacon, i'm not sure what you are referring to in terms of "undue Government interference" but I am assuming you think that the government shouldn't get involved "controlling" prices in the property market through CGT and the like.

Isn't a governments function to provide the regulatory environment so it's economy can improve it's productivity. It is only through productivity gains that the a country can improve the standard of living of its citizens (i.e. companies make more profits and can afford to pay their workers more). NZ productivity has dropped over the last 10 years - we now sit well into the lower half of the OECD.

By allocating most of NZers wealth into property we have created a masive amount of foreign debt (only because prices have risen not because we have built heaps of houses). This increase in the "market cap" of housing hasn't resulted in greater output - rents haven't kept pace with the price increases. The end result is we still have to pay the debt back - aren't we lucky interest rates are historical lows. I see it very much in the governments remit to make sure that the current distortions are not perpetuated. I don't agree with CGT as the method to do it though. That just creates more distortions (why have CGT on houses and not businesses or shares).

Anyway, off topic. This was an interest rate thread - sorry for highjacking.

minimoke
18-09-2009, 02:54 PM
I don't know why you think debt is your friend? It is just a different form of slavery - to the bank rather than plantation owner.

Back in 94 you made a move without anyone holding a gun to your head. You voluntarily went to the bank and asked them to loan you some money to help you achieve one of your ambitions. Like a "friend" they stepped up and gave you a hand and it came at a cost called interest. It was a mutually benificial relationship - quite unlike slavery. Indeed you could have broken the relationship wheneever you liked - you just had to either save harder or get flatmates (like you did) or sell your house. But there will be a time when you reckon you can make more by using someone elses money than your own - and debt will again be your friend.

Your second paragraph sums it up nicely - housing is affordable if people are prepared to make sacrifices. Its the largest thing most people will ever buy in their lives - its not supposed to be easy. Thats why I think people struggle buying their first home under the guise of inaffordability - its because they want an average home half way up the property ladder rather than starting closer to the bottom.

bung5
18-09-2009, 02:58 PM
Whats the big deal ? Doesn't matter if houses are affordable or no. If they are unaffordable then people will not buy houses and the price will come down. It can not last forever that the young can't buy houses...

Ptolemy
18-09-2009, 03:29 PM
MM

I think you miss the point - is that house in Sandringham 15 year later worth nearly 3.5 times more when incomes have only gone up 40% in that same period. If I was buying now on the same relative wages I would be contemplating living a tiny two bedroom unit in Papakura. If I chose to do that if would be a significant tradeoff to my lifestyle. The argument was about the affordability of house in general not whether someone could afford a shoebox in the booeys. You will always be able to find a house you can afford to buy (Mataura, Papakura) if you look hard enough but to what ends do you want to sacrifice life - that is the point of having an affordability index.

Anyway, I doubt either of us will change the others mind. Debate is good. It is an important topic for most NZers given most of us have most of their life's saving tied up in it.

neopoleII
21-09-2009, 06:46 PM
well,
after reading a weeks worth of heated debate about how houses are affordable for those that are willing to give up smoking, stop breeding, and live in low class areas for their first home, i read 2 articals today about housing afordabiltiy and its affect on society.

from those who cash in on cap gains, to those that cant get on the ladder........ even if they give up smoking.
what some people dont realise is, housing used to be affordable for almost all folks a generation ago.
now its for the skilled worker or double income family only.
so where does that place the multitude of folks who work in a factory or shop etc.
100's of thousands of kiwis earn less than $18 an hour, and these folk (without the help of taxpayer benifits) cant afford to buy a house or even rent it without that help.
sooner or later......... im guessing sooner now, .... going by these articals, low income earners will be able to buy houses in low class suburbs that the property investor /speculators have snapped up with tax deductable/ depreciable loans to collect government funded housing suppliments from low income workers.
some sort of ring fencing or cgt will come into effect in the near term future, and the result is that speculators will walk away from these cash cows and therefore these properties will reduce in price to be affordable to those that live and work in the factory zones where these houses are.

i am sick to death of my taxes going to landlords via housing suppliments, and these landlords collecting tax loses and "depreciation" and then selling for cap gains and the ird is sitting on its thumbs.

if......... (which wont happen).... there was no housing suppliments, a house in mangere east or otara, would not be worth what they are today, and the low incomers could then afford to own.
imho, working for families and housing suppliments have created a class of property millionaires at the expence of low incomers and tax payers.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10598694
http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=10598551

minimoke
22-09-2009, 09:09 AM
what some people dont realise is, housing used to be affordable for almost all folks a generation ago.

And a genration ago you couldn't buy a car unless you held foreign currency and knew the right people. Women knew their place was in the home. TV was for the wealthy and we had liscencing fees. We had Nordmeyers "Black Budget" and the Beatles were just becoming known (which will be intersting for the new digital generation of Beatles fans). The Ranfuly Shield is what counted and you needed a building to house a computer.

The world moves on: if we want to hark back to the past we have to take the good with the bad. Why go back a generation - what about a few generations and to the 1930's when we saw the first State Houses being built for those on low to moderate incomes or do you want to go back to the 1900's with the introduction of workers housing.

Back then there was no god given right to own your own home and those that did had very humble abodes. Nor is there any god given right today - times change and move on. Somethings become more affordable and some don't. But the fact remains - if a person wants to buy a house and is prepared to make the sacrifices then it can be done.

POSSUM THE CAT
22-09-2009, 06:35 PM
Minimoke try buying a house on the minimum wage & see how you cope unless you are using the NZ minimum wage to build a Mud Hut in Ethiopia credit is the bain of life it pushes prices up far faster than wages. And how many businesses were moaning about the increase in the minimum wage. But then again they think all their customers are earning Mega Bucks & living in the times of the Black budget was a lot better for a lot of people than now. Take the elderly person that needs care. They would be a lot better off shooting a politician & spending there last years in jail than an aged care facility. Plus they would get better medical care as well in jail.

minimoke
23-09-2009, 07:02 AM
Minimoke try buying a house on the minimum wage & see how you cope It has never been a right of anyone to own their own home. The challenge of owning a home has always been that - and the "Minimum Wagers"(as a generalisation) have always been locked out of home ownership - thats why we had state houses and Workers Housing in the past and why we have Working For Families and Accomodation Supplements now.

I'd go far as saying that owning a home is something a minimun wager should most definitly not aspire to (especially an "average" home) - they should firstly aspire to gain skills and education that lifts their wage rate. A Minimum Wager could concievably afford their own home (can't see it myself - but there are probably opportunites locally in Bromley or Aranui) but then they have to pay the rates, insurance and property upkeep - something their budget probably won't allow.

"Renters" are not second class citizens. If people cannot afford to own a home then they should not be looked down on if they are renting. There are valid arguments for renting over home ownership so those with aspirations can still make a home in a rental and do very well out of it.

beacon
23-09-2009, 09:20 AM
i am sick to death of my taxes going to landlords via housing suppliments, and these landlords collecting tax loses and "depreciation" and then selling for cap gains and the ird is sitting on its thumbs.

if......... (which wont happen).... there was no housing suppliments, a house in mangere east or otara, would not be worth what they are today, and the low incomers could then afford to own.
imho, working for families and housing suppliments have created a class of property millionaires at the expence of low incomers and tax payers.

But not sick at all to see them go to those (barring genuine cases) who don't wish to get off their bums and earn an honest wage. It is these "benefit is birthright" people who make a mockery of the benefit system which was a noble socialistic idea of providing social security to people who deserved it. Where community cared and provided a helping hand. Now that helping hand has become "a right", and has a consequence for those who genuinely deserve help (like superannuitants to name just one demographic).

It is not just accomodation supplement that gets paid out of tax dollars, but also the cost to feed their whole families, clothe them, provide (free) electricity, and phones, subsidised medical care and medication, free education, social amenities, even free facilities in jail if some of them end in jail. The landlord has to chase the tenants for rent, pay the bill for water and damages, spend money to find their wherabouts when they do runners, pay court costs, get orders and still end up with a payment of $5 a week for life, if he is lucky.

Contrast this with how much Housing NZ spends each year just on repairs of its housing stock. Who pays? the taxpayer. Not all landlords have taken into account their risks professionally, and not all beneficiary tenants are bad. But you only need one to blow your retirement, beneficiary or non-beneficiary. One must beware what one wishes for, lest one get it. landlords provide a vital social service, and I for one, am grateful.

neopoleII
23-09-2009, 10:59 AM
people who abuse the benifit system should be barred from recieving one.
people who abuse or cheat landlords should also be barred or punished and registered.

another problem is that the govt doesnt take alot of action against those who cheat the system, whether benifit fraud or abuse or investment property speculation.

i would be happy for a fairer system both ways which would leave room for the genuine investor landlord and an opertunity for low incomers (who do try to save) to get a home.
but as it stands low class properties are in demand from high income earners for the govt funded rents and cap gains and tax deferments.

beacon
24-09-2009, 11:29 AM
fair point. Not sure if demand for economic end stock is solely for renters though. Also, at the moment lending seems tight for property investors...

minimoke
06-10-2009, 12:00 PM
well,
after reading a weeks worth of heated debate about how houses are affordable for those that are willing to give up smoking, stop breeding, and live in low class areas for their first home, i read 2 articals today about housing afordabiltiy and its affect on society.

Don't take my word for it - how about Massey University researchers. In todays news:
"Homes became more affordable in the three months to August 31 mostly because of low interest rates, according to the Massey University Home Affordability report.

Home affordability improved by 2.3 percent in the quarter, which was less than the 8.5 percent improvement between February and May.

Home affordability improved 17 percent on an annual basis."

neopoleII
06-10-2009, 03:12 PM
i see we're posting sound bites now......
all it says is home affordabiltiy is improving....... thats a long way from affordable.
the ratio of afforability is still way off from long term averages.
we are still in masive debt, and unemployment is rising.

having said that, my brother is a partner in a civil enginereering/ surveying co and he has mentioned that subdivisons are moving again.....
so some folks are hoping for an early worm.
but that is just the typical property speculation syndrome that kiwis suffer from.

my bet is the govt will have to step in at some stage.

The GrandMaster
06-10-2009, 04:03 PM
i see we're posting sound bites now......


"now"?

TGM

POSSUM THE CAT
06-10-2009, 06:24 PM
How long before interest rates have to Increase. there will be a lot of money cross the Tasman until they do

neopoleII
08-10-2009, 05:41 PM
i dont think floating interest rates will rise for quite a while.
what with the rising dollar affecting export incomes, and possibly jobs in the export sector.
and house prices are still high compared to incomes, this link states the median incomes for All nzers and then wage and salary earners......... the numbers are not pretty.


http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10602017

and then the tax working review group who have to find a way to reavaluate the tax system, they mention alot about investment property and the lack of tax income for the ird from it.
lots of hurdles to get through, but something will happen,
which when it does, should take the preasure of interest rates as well.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10601862

POSSUM THE CAT
08-10-2009, 06:47 PM
NeopoleII I already have 65% of my wealth across the tasman and unless NZ interest rates hit at least 3% by Cristmas a lot more of it will be over there and if you are Japanese or Chinese or any other race are you going to accept 2.5% from NZ or 3.5% from Australia So who are you going to borrow money from. KIwis with money are sending it to Australia

Aaron
23-10-2016, 01:00 PM
This is the most relevant thread I could find.

Do negative interest rates seem insane to anyone else. i.e. I will pay someone to use my money and the more they borrow the more interest they make.

Just reading this article has me worried.
http://www.smh.com.au/business/markets/currencies/how-phasing-out-cash-could-help-the-economy-20161020-gs6mpr.html

Is it being discussed seriously and will it happen?

I suppose borrowers might limit their borrowings based on the threat interest rates could turn positive again one day. What about lenders? I guess you sell bonds to central banks so that individuals saving gets taken out of the equation. It would have to as no-one would bother saving anymore. All positive for gold I suppose but if they went cashless then I think central banks would need to sell their gold reserves to prove it is no longer considered money.

Valuegrowth
12-11-2016, 05:03 PM
Rate cut and maintaining negative interest rates have become new normal in some countries now. They want to see growth by managing interest rates. They have selected easy money policy option. My question is who will begin to raise rate first?

https://www.theguardian.com/business/2016/nov/02/fed-cut-interest-rates-recession-negative-inflation-targets

The US central bank should look at options including negative rates and higher inflation targets to stimulate the economy

http://www.theweek.co.uk/brexit/64116/bank-of-england-scraps-planned-interest-rate-cut

Bank of England ditches second interest rate cut

https://www.bloomberg.com/news/articles/2016-11-07/prudential-sees-kuroda-taking-negative-rates-lower-again-in-2017

Prudential Sees Kuroda Taking Negative Rates Lower Again in 2017

http://qz.com/809970/inequality-is-rising-in-denmark-and-negative-interest-rates-are-to-blame/

Inequality is rising in Denmark, and negative interest rates are to blame

macduffy
13-11-2016, 12:36 PM
My question is who will begin to raise rate first?



Probably the US Fed. But the real issue isn't who will be first, it's more a matter of pretty much universal acceptance that the next move will be up.

NeverQuestion
14-12-2016, 04:29 PM
Probably the US Fed. But the real issue isn't who will be first, it's more a matter of pretty much universal acceptance that the next move will be up.

For anyone who has not worked out the connection.. when the Fed rates rise then so too does the Mortgage rates in NZ...[and rents]

"Of course, when US interest rates go up our interest rates go up as well, so that's why our five year mortgage rates are rising, even though the Reserve Bank has its official cash rate on hold," Speizer said."

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11766939

We are all in for a world of pain

macduffy
14-12-2016, 06:14 PM
For anyone who has not worked out the connection.. when the Fed rates rise then so too does the Mortgage rates in NZ...[and rents]

"Of course, when US interest rates go up our interest rates go up as well, so that's why our five year mortgage rates are rising, even though the Reserve Bank has its official cash rate on hold," Speizer said."

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11766939

We are all in for a world of pain

Not quite all! Some of us have paid off our mortgages - mostly financed at much higher rates than those current or prospective! - and will welcome slightly more realistic returns as deposit rates "adjust".

smpl
17-12-2016, 11:41 AM
Not unless you're locked in fix for as long as possible and own puts at the front end of the interest rate curve!

Took 7 years of patience to pull this one off :)

NeverQuestion
19-12-2016, 01:02 PM
Not unless you're locked in fix for as long as possible and own puts at the front end of the interest rate curve!

Took 7 years of patience to pull this one off :)

It depends on a few things

1) First up the we may be looking at a 05 to a 07 event (Fed have been hinting at this) - See chart attached

Where the Interest rate increase happens rapidly over two years following a regular trend up

As to if the banks would still Honor the low fixed rate when it raises so quickly I'm not sure

2) Higher rates mean cooling market conditions and if prices slide in a big way then banks may start calling in the loans at low rates

As their stability gets tested it may get messy or not.. honestly don't know how this would play out

Disc: Don't own a home or have any hope so most likely bias (Doesn't mean I don't follow current events) :)

stoploss
19-12-2016, 01:13 PM
NeverQ in regards "As to if the banks would still Honor the low fixed rate when it raises so quickly I'm not sure"
When customers take out a fixed rate loan with the bank . For arguments sake lets say 4.8 % for a five year term . The bank effectively parcels all the mortgages up for the day/week and goes into the wholesale market and hedges this risk up in the swap market . So todays 5 year swap rate is 3.05 % , they can lock it in there ..... You have a contract they have to honour ......
So that is why when you break a fixed mortgage when rates have gone down the bank will ask for an early repayment fee as they have hedged the risk and will surfer a loss when you cancel your contract with them .
So the bank is not necessarily going to lose when rates go up if everyone is fixed at lower levels ( unless they have their hedging wrong ) .Any problem would occur in 2 /3/5 years time when the lower fixed rates start rolling off and you then have to take the prevailing floating/fixed rate which might be circa 7 % , that would be a pinch on a lot of budgets ......

Aaron
19-12-2016, 01:34 PM
We are all in for a world of pain
Seems a bit dramatic. Fed will raise 4 times if this is at .25 of 1% then a whole 1% over the year. On a $1mill mortgage $10,000 a year extra interest on a $500,000 mortgage $5,000 extra a year or $100 a week. An average mortgage is probably a lot less than this.
If you have borrowed too much the monetary system has your back. Rising oil prices might spur on the long awaited inflation that will take care of your debt. I would guess a 1% interest rate rise will be way behind inflation, especially if you include housing costs.

macduffy
19-12-2016, 02:44 PM
2) Higher rates mean cooling market conditions and if prices slide in a big way then banks may start calling in the loans at low rates


Not unless said loans are in arrears! Confidence is everything in banking and a bank that "called in" a performing housing loan might as well shut up shop, permanently!

NeverQuestion
19-12-2016, 05:02 PM
NeverQ in regards "As to if the banks would still Honor the low fixed rate when it raises so quickly I'm not sure"
When customers take out a fixed rate loan with the bank . For arguments sake lets say 4.8 % for a five year term . The bank effectively parcels all the mortgages up for the day/week and goes into the wholesale market and hedges this risk up in the swap market . So todays 5 year swap rate is 3.05 % , they can lock it in there ..... You have a contract they have to honour ......
So that is why when you break a fixed mortgage when rates have gone down the bank will ask for an early repayment fee as they have hedged the risk and will surfer a loss when you cancel your contract with them .
So the bank is not necessarily going to lose when rates go up if everyone is fixed at lower levels ( unless they have their hedging wrong ) .Any problem would occur in 2 /3/5 years time when the lower fixed rates start rolling off and you then have to take the prevailing floating/fixed rate which might be circa 7 % , that would be a pinch on a lot of budgets ......

Happy to be wrong! Just find it odd that we are at record low interest rate levels and if they climb quickly as they have in the past just how banks can keep that contract obligation without taking a massive hit

stoploss
19-12-2016, 10:37 PM
Happy to be wrong! Just find it odd that we are at record low interest rate levels and if they climb quickly as they have in the past just how banks can keep that contract obligation without taking a massive hit

NQ , I explained in my post they can hedge it in the wholesale market ... don't panic they don't make a billion dollars a year odd by losing money to the average punter on their mortgage .....

peat
20-12-2016, 08:18 AM
Interest rates are likely to experience upward pressure but despite the yearly bullish engulfing candle being a worthwhile peice of information the world as a whole remains tender and any hiccough from say China or Europe could easily cause a return to lower yields. Obviously Trumps stated fiscal expansionist policies are a big factor in this turnaround of trends but they have yet to be actually implemented and may not eventuate exactly as the market appears to be anticipating.
In NZ I dont expect the OCR to be raised much if at all in 2017. The first half is too soon and the second half is the election which will induce inertia, i.e. no change.
Bondholders should be wary if they are traders, but I personally wouldnt jump ship just yet especially if they are held as part of a full portfolio with laddered duration and equity exposure.

(edit - I just realised this is in the Property forum, which my comments are not specifically related to)

winner69
11-06-2017, 07:58 AM
Wheeler is the worst RB Governor we have ever had - we'll pay for it in a couple of years

He has serious personal issues

http://www.sharechat.co.nz/article/1ec9a1f0/wheeler-calls-on-bank-of-new-zealand-boss-to-rein-in-top-economist.html?utm_medium=email&utm_campaign=Wheeler%20calls%20on%20Bank%20of%20Ne w%20Zealand%20boss%20to%20rein%20in%20top%20econom ist&utm_content=Wheeler%20calls%20on%20Bank%20of%20New %20Zealand%20boss%20to%20rein%20in%20top%20economi st+CID_84551d44337b497385f5bbcfaaa4cee8&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle1ec9a1f0wheele r-calls-on-bank-of-new-zealand-boss-to-rein-in-top-economisthtml

Aaron
12-06-2017, 07:49 AM
Wheeler is the worst RB Governor we have ever had - we'll pay for it in a couple of years

He has serious personal issues

http://www.sharechat.co.nz/article/1ec9a1f0/wheeler-calls-on-bank-of-new-zealand-boss-to-rein-in-top-economist.html?utm_medium=email&utm_campaign=Wheeler%20calls%20on%20Bank%20of%20Ne w%20Zealand%20boss%20to%20rein%20in%20top%20econom ist&utm_content=Wheeler%20calls%20on%20Bank%20of%20New %20Zealand%20boss%20to%20rein%20in%20top%20economi st+CID_84551d44337b497385f5bbcfaaa4cee8&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle1ec9a1f0wheele r-calls-on-bank-of-new-zealand-boss-to-rein-in-top-economisthtml
What is Wheeler doing that reserve bank governors haven't been doing for the last 20 to 30 years? Sounds like Topliss just annoyed Wheeler made him look clueless. I would have thought reserve bank governors and economists learnt the same thing at school. It is not a science it is a study of human behavior.

JBmurc
20-07-2017, 10:53 PM
In 1898, Swedish economist Knut Wicksell argued that there existed a “natural” rate of interest that balanced the supply and demand of credit, assuring the appropriate allocation of saving and investment. Should market interest rates remain below the natural rate for an extended period, investors will borrow excessively, allocating capital into less productive investments and ultimately into purely speculative ones.

This is what the economy faces today after years of meagre borrowing costs. Policymakers have created a Wicksellian dilemma where investment spurred by low interest rates is driving economic growth, but these inefficient investments support growth at the expense of lower productivity in the economy. In recent years, this investment has flowed into housing, commercial real estate and equities, driving asset prices higher, exactly the goal of the Central Banks in the wake of the financial crisis. But as the recovery in real estate and equities matures, a darker side of this imbalance between natural and market rates is beginning to emerge. Many investments today using artificially cheap capital are not increasing productivity — they are being made because money is cheap and the profit motive is strong.

The harsh reality is extended periods of malinvestment result in declining productivity growth, lower potential output and slower increases in living standards. A failure to normalise market interest rates soon will result in more capital ploughed into investments that are less productive and more speculative. As productivity declines, long-term growth will be stunted. Eventually, inflationary pressures will build, forcing market interest rates to rise. The longer market rates remain below the natural rate the greater the purge will be once higher rates induce a recession, causing a sharp rise in defaults among malinvestments made during the period of cheap credit.

kiora
21-07-2017, 07:28 AM
In 1898, Swedish economist Knut Wicksell argued that there existed a “natural” rate of interest that balanced the supply and demand of credit, assuring the appropriate allocation of saving and investment. Should market interest rates remain below the natural rate for an extended period, investors will borrow excessively, allocating capital into less productive investments and ultimately into purely speculative ones.

This is what the economy faces today after years of meagre borrowing costs. Policymakers have created a Wicksellian dilemma where investment spurred by low interest rates is driving economic growth, but these inefficient investments support growth at the expense of lower productivity in the economy. In recent years, this investment has flowed into housing, commercial real estate and equities, driving asset prices higher, exactly the goal of the Central Banks in the wake of the financial crisis. But as the recovery in real estate and equities matures, a darker side of this imbalance between natural and market rates is beginning to emerge. Many investments today using artificially cheap capital are not increasing productivity — they are being made because money is cheap and the profit motive is strong.

The harsh reality is extended periods of malinvestment result in declining productivity growth, lower potential output and slower increases in living standards. A failure to normalise market interest rates soon will result in more capital ploughed into investments that are less productive and more speculative. As productivity declines, long-term growth will be stunted. Eventually, inflationary pressures will build, forcing market interest rates to rise. The longer market rates remain below the natural rate the greater the purge will be once higher rates induce a recession, causing a sharp rise in defaults among malinvestments made during the period of cheap credit.

Inc in inflation & IR slower than everyone anticipating https://www.ecb.europa.eu/press/key/date/2016/html/sp160615.en.html
What is the natural rate? Surely linked to inflation & unemployment which don't appear to be in a bubble.

JBmurc
21-07-2017, 08:50 AM
Inc in inflation & IR slower than everyone anticipating https://www.ecb.europa.eu/press/key/date/2016/html/sp160615.en.html
What is the natural rate? Surely linked to inflation & unemployment which don't appear to be in a bubble.

I guess the natural rate is what keeps both savers and leaders balanced ....and as the NZD is such a small economy at the bottom of the world ..it must have higher debt(bond/treasury) rates to attract foreign capital >>than say US -EURO rates

“NZ banks use a serving rate higher than the current rates shown on their website and this determines the amount a person can borrow. They vary from bank to bank and most are at 7.5%. ANZ has just reduce this to 7.3%


Lowest rates in 5000yrs !!!!
https://www.businessinsider.com.au/chart-5000-years-of-interest-rates-2015-9?r=US&IR=T


Energy is well known core to inflation >>>IMHO oil will spike $100+ before 2020

While the Mainstream media continues to put out hype that technology will bring on abundant energy supplies for the foreseeable future, the global oil and gas industry is actually cannibalizing itself just to stay alive. Increased finance costs, falling capital expenditures and the downgrade of oil reserves are the factors, like flesh-eating bacteria, that are decimating the once great oil and gas industry.

This is all due to the falling EROI – Energy Returned On Investment in oil and gas industry. Unfortunately, most of the public and energy analysts still don’t understand how the Falling EROI is gutting the entire system. They don’t see it because the world has become so complex, they are unable to connect-the-dots. However, if we look past all the over-specialized data and analysis, we can see how bad things are getting in the global oil and gas industry.

https://srsroccoreport.com/warning-the-global-oil-gas-industry-is-cannibalizing-itself-to-stay-alive/

Tomtom
21-07-2017, 06:42 PM
Not worried about the headline interest rates too much for the last few years.

I have an Asian friend who used to be a mortgage broker and he let me in on a little trick within Asian property investors (Not involving a Nigerian prince type scenario!)

Although banks offer you refinancing money with a “promise” to stay with the bank that “promise” isn’t really profitable to enforce. If you tell the bank complaint line you’ll take them to the ombudsman about the refinancing money the bank won’t reclaim it if less than $4000 because the cost of going through the ombudsman process is greater than $4000.

So for the last few years I’ve been switching banks at 1 year intervals and keeping the refinancing money (as it’s not profitable to enforce the contract.) It’s worked out well really well. In fact hilariously one New Zealand banks mortgage manager has given me refinancing money twice! I guess mortgage managers are probably treated very poorly by banks (they certainly work all hours) and couldn’t care less as long as they hit bonus sales figures?

I do not know if this will last much longer however. Just signed on a rental with ANZ who offered me only 0.80% (as % of loan value, that seems to be the way mortgage managers work it out) refinancing money whereas the last few years I managed to get 1%. Hopefully it benefits a few of you before banks get wise and stop giving refinancing money.

BTW always ask for an Asian mortgage managers as well. I tend to find they tend to know how the game is played regarding getting the lowest rates and most cash. Even within the same bank you can get two completely different offers by speaking to different mortgage managers.

JBmurc
21-07-2017, 08:48 PM
Not worried about the headline interest rates too much for the last few years.

I have an Asian friend who used to be a mortgage broker and he let me in on a little trick within Asian property investors (Not involving a Nigerian prince type scenario!)

Although banks offer you refinancing money with a “promise” to stay with the bank that “promise” isn’t really profitable to enforce. If you tell the bank complaint line you’ll take them to the ombudsman about the refinancing money the bank won’t reclaim it if less than $4000 because the cost of going through the ombudsman process is greater than $4000.

So for the last few years I’ve been switching banks at 1 year intervals and keeping the refinancing money (as it’s not profitable to enforce the contract.) It’s worked out well really well. In fact hilariously one New Zealand banks mortgage manager has given me refinancing money twice! I guess mortgage managers are probably treated very poorly by banks (they certainly work all hours) and couldn’t care less as long as they hit bonus sales figures?

I do not know if this will last much longer however. Just signed on a rental with ANZ who offered me only 0.80% (as % of loan value, that seems to be the way mortgage managers work it out) refinancing money whereas the last few years I managed to get 1%. Hopefully it benefits a few of you before banks get wise and stop giving refinancing money.

BTW always ask for an Asian mortgage managers as well. I tend to find they tend to know how the game is played regarding getting the lowest rates and most cash. Even within the same bank you can get two completely different offers by speaking to different mortgage managers.

Right yes I took a floating loan on a spec Property trade that I sold only months after taking it out with Westpac got like 2k cash was fully expecting they would claim it back (as i signed doc stating I had to).....but nothing ....I did take out a much smaller 1yr fixed loan so probe not stressed about it ....

As to switching banks ....for me with company loans using Family trust property as security I don't get much change out of $1500 in legal costs .... so not worth the hassle >> different story if I had large debts I guess ...but good luck to jumping banks ...personal a good day trade can make me as much

Investor
22-09-2017, 09:06 PM
Where are the ethics in repeatedly breaching a contract for personal gain? If you weren't happy with the initial deal or intended to refinance at a later date you shouldn't of entered into a contract whereby you can not refinance/sell without repaying the cash contribution offer. It is a great 'scheme' if you have no morals but is extremely unethical.

JBmurc
23-05-2019, 10:14 PM
Going through the process to once again see what I can get on re-financing two loans total $616k currently with Westpac
Got some early details from ANZ best rates 1-2-3yr fixed term 3.89% + $3,000 cash to shift ... hoping to get them to improve offer as LVR under 50% .. not stressed to stay at WP if they can cut a sharp rate + cash to stay

waiting to hear back from ASB-Westpac thinking along the lines of fixing for 3yrs+ as thinking the cutting in rates must be coming to an end this year esp as the NZD is continuing to fall in value putting pressure on imports we kiwis depend on...

briefly talked with HSBC but as they don't take commercial property income into the lending equation I didn't even Qualify on income to debt

SBS-Kiwi-BNZ are complete muppets I'm not going waste my time with banks that don't understand residential equity or sane commercial lending timeframes

baller18
30-05-2019, 09:11 AM
Got some early details from ANZ best rates 1-2-3yr fixed term 3.89% + $3,000 cash to shift ... hoping to get them to improve offer as LVR under 50% .. not stressed to stay at WP if they can cut a sharp rate + cash to stay


$3000 cash to shift, you meaning cashback right?

If that is the case, you can def get better cash back, it's normally $1000 per 100k. So could try other brokers as they get better deals.

JBmurc
30-05-2019, 12:42 PM
Got some early details from ANZ best rates 1-2-3yr fixed term 3.89% + $3,000 cash to shift ... hoping to get them to improve offer as LVR under 50% .. not stressed to stay at WP if they can cut a sharp rate + cash to stay


$3000 cash to shift, you meaning cashback right?

If that is the case, you can def get better cash back, it's normally $1000 per 100k. So could try other brokers as they get better deals.

Yeah waiting to hear back from ASB .. I've never had 1k per 100k even though brokers as we know they take there cut from the banks

I certainly would shift if I could get more than 3k that they usually offer which after $1000+ in legal costs with trusts/company, etc leaves me with 1.5k-2k

Westpac the only bank they has paid me $2k just to stay with the bank over shifting to another bank but has strings you must stay with bank for min 2yrs etc . so last time I just stayed with WP..

westpac also has alway given me rates under WP advertised carded rate

JBmurc
18-06-2020, 08:35 AM
Have re-signed with Westpac - 1yr fixed term 2.65%

Great rate IMHO might go longer term next JULY21 ...might well get 5yr fixed term for 2.65%

smpl
18-06-2020, 10:32 AM
Holy hell! Can someone please explain to me why we can't fix longer than 5 years in New Zealand?

Fuzzy Dunlop
18-06-2020, 10:44 AM
You're probably right. The RBA just recently introduced a new measure targeting a 0.25% yield on 3-year govt bonds in Aus, since it ran out of room with the cash rate (0.25%).

Entrep
25-03-2021, 03:30 PM
Anyone thinking of fixing some debt at 2.99% for 5 years? Had it not been for the recent announcement it seemed certain the RBNZ would raise in May (and the market would price it in sooner) making the 5 year 2.99% rate a steal. Now I am not so sure. Any thoughts appreciated.

stoploss
25-03-2021, 08:31 PM
Anyone thinking of fixing some debt at 2.99% for 5 years? Had it not been for the recent announcement it seemed certain the RBNZ would raise in May (and the market would price it in sooner) making the 5 year 2.99% rate a steal. Now I am not so sure. Any thoughts appreciated.

With the recent GDP result I can't see the RBNZ tightening anytime soon .
Personally I think 2.99% is cheap money for 5 years and if it means you sleep at night that's a good thing.( as long as you not selling etc soon as potentially subject to a break fee)
Short rates likely stay down here for a while but can see the 3-5 year tenors move up as international bond rates move up.
I think of it this way if you fix in for 5 years at 2.99% think of it as a bit of an insurance policy .
If the rate goes down to 2.49 % its a couple of coffees a fortnight ( depending upon your amount) However if rates went back to 5 % , can you afford that or would that be a big hit to
your budget that you would be gutted about having to pay ?
If your house doesn't burn down you are not gutted about the insurance premium you paid are you , it means you sleep at night and know your ( likely) biggest asset is covered .
Personally I think it's a good idea to have a few tranches and have some locked in longer.

Norwest
25-03-2021, 10:13 PM
Anyone thinking of fixing some debt at 2.99% for 5 years? Had it not been for the recent announcement it seemed certain the RBNZ would raise in May (and the market would price it in sooner) making the 5 year 2.99% rate a steal. Now I am not so sure. Any thoughts appreciated.

Yep I did, I literally fixed a stack of my loans @ 5 years earlier this month, although I am playing the field - roughly 50/50 with the rest on floating.

I've been hovering over the trigger on 5 years fixed for approximately 7 months now and figured it was time to lock something in to hedge my bets.

iceman
25-03-2021, 10:47 PM
I think there are some signs from offshore that long term rates are under pressure to go higher and have already done so. But the Fed is fighting this and has stated they will do whatever they need to do to keep rates low. I think we need to remember the phrase "don't fight the Fed" (Martin Zweig, "Winning on Wall Street").

Here in NZ we have the RBNZ which has more influence on short term rates equally hell bent on keeping rates low. The trading banks had spare cash on deposit with the RB of $16.3 B in February 2020. In February 2021, this amount had increased to $63.6 B. In that time the RB has printed $48 B so only $ 300M of it has gone into circulation, the rest is sitting at the RB earning the trading banks 0.25%.
At the same time the banks currently have something like $66B more on short term deposit than they had forecasted.

Based on this, I just can not see rates increasing anytime soon and despite thinking long and hard about moving some borrowings to 5 year terms, I can't bring myself to do it and will be renewing any upcoming fixed terms for 12 months.

Entrep
26-03-2021, 07:53 AM
Thanks everyone, yes I am of the mind that anything 5.x% and lower is a steal (from a historical perspective) and 2.99% at 5 years would certainly provide some certainty/insurance. It's also only about 25% of my lending I am talking about (the rest on a 12 month term due to come off in around 6 months).

Also, I can't see rates going down any further - can anyone else? The 0.7% difference is so miniscule (on a historic basis too) that 5 years seems sensible for at least some of the lending.

Only thing holding me back is I have been burned fixing for long periods before over the last several years (ie as rates have just kept coming down) but the bottom does seem well and truly in on longer terms anyway.

stoploss
26-03-2021, 08:37 AM
Thanks everyone, yes I am of the mind that anything 5.x% and lower is a steal (from a historical perspective) and 2.99% at 5 years would certainly provide some certainty/insurance. It's also only about 25% of my lending I am talking about (the rest on a 12 month term due to come off in around 6 months).

Also, I can't see rates going down any further - can anyone else? The 0.7% difference is so miniscule (on a historic basis too) that 5 years seems sensible for at least some of the lending.

Only thing holding me back is I have been burned fixing for long periods before over the last several years (ie as rates have just kept coming down) but the bottom does seem well and truly in on longer terms anyway.
If the GDP keeps being a shocker,and there are unintended consequences for the economy from this weeks move by the Govt who knows ? I always thought we would see main bank 1.99% for a year . I think landlords that are new to the game and where the margins are tight will look to increase rents ..... so begs the question does the Govt go a step further and bring in rent control, after this weeks move you can't really rule anything out.

Entrep
27-04-2021, 12:05 PM
Long term rates moving up https://interest.co.nz/personal-finance/110080/home-loan-heavyweight-asb-has-trimmed-some-short-fixed-rates-and-raised-some

2.99% at 5 years was a steal

Norwest
28-04-2021, 08:48 AM
Long term rates moving up https://interest.co.nz/personal-finance/110080/home-loan-heavyweight-asb-has-trimmed-some-short-fixed-rates-and-raised-some

2.99% at 5 years was a steal

Yep, it really was a steal and I'm glad I locked such a large portion in at this rate last month.

Entrep
28-04-2021, 08:50 AM
Yep, it really was a steal and I'm glad I locked such a large portion in at this rate last month.

I managed to get in the nick of time too. Stress free for 5 years whatever happens

smpl
11-05-2021, 04:38 PM
Anyone know why ANZ won't offer a competitive rate for 5 yr?

Not only am I fixed for 5 yrs but I'm short the 90 day bank bills.

stoploss
11-05-2021, 04:53 PM
Anyone know why ANZ won't offer a competitive rate for 5 yr?

Not only am I fixed for 5 yrs but I'm short the 90 day bank bills.
What are they offering you ?
Note they all pushed the 3-5 year rates up slightly recently and reduced the 1 year .

smpl
11-05-2021, 06:58 PM
3.59% and that was in mid-March before the long end went up and when the median rate offered across all banks was 2.99%. Now the median rate is around 3.3% and I'm assuming their rate will be the same if not higher. I argued that other banks (ASB) could do better and they would not improve their price which is what they've usually done in the past.

stoploss
11-05-2021, 07:30 PM
3.59% and that was in mid-March before the long end went up and when the median rate offered across all banks was 2.99%. Now the median rate is around 3.3% and I'm assuming their rate will be the same if not higher. I argued that other banks (ASB) could do better and they would not improve their price which is what they've usually done in the past.

I think the rules prevent me from advertising , but send me a PM if you would like me to help. ( at no cost to you )

Norwest
11-05-2021, 08:21 PM
Anyone know why ANZ won't offer a competitive rate for 5 yr?

Not only am I fixed for 5 yrs but I'm short the 90 day bank bills.

They're 100% calling your bluff that you won't move... every second person threatens that now days and hardly any of them move.

Banks are a lot more stringent around matching compared to what they have been in the past.

There is a "negotiated rate" senior bank managers can offer, anything more requires their managers approval and they deal with big figures every day - your application was likely only given a passing glance - if it even got to that level.

If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem.

smpl
11-05-2021, 09:03 PM
stoploss: I sent you a message.

Norwest: I was told that I don't have a bank manager any more. I did state that I would move to another bank and even that wasn't enough to get them to negotiate. If If I do start the process with another bank, do you think there is a chance they will reach out to me instead?

JBmurc
11-05-2021, 10:26 PM
3.59% and that was in mid-March before the long end went up and when the median rate offered across all banks was 2.99%. Now the median rate is around 3.3% and I'm assuming their rate will be the same if not higher. I argued that other banks (ASB) could do better and they would not improve their price which is what they've usually done in the past.

I had something similar with ANZ ... they got me with sharp 1yr fixed rate + 5k Cash(from ASB) .. then when it came up for re-financing they wouldn't match the better rates advertised elsewhere ... I called their bluff and moved to Westpac .... so far so good WP have been pretty darn good to deal with ... will be re-financing again next month ... I see SBS 1yr fixed term 2.19% ... will be pushing to see WP match this rate plus some cash to stay (have had a couple of payments to date to stay)

Have only been 1yr Fixing for many years ... I personal don't see high rates coming anytime soon ... far too much debt held by the masses would break the system if seen a spike higher .. personally think banks pushing up the longer end a pure play to get debt holders to sign up for longer rates ... I wouldn't be surprised if we don't see short term rates above 3% this decade its just the way the western world has all gone japanese ...

Norwest
12-05-2021, 09:21 PM
Norwest: I was told that I don't have a bank manager any more. I did state that I would move to another bank and even that wasn't enough to get them to negotiate. If If I do start the process with another bank, do you think there is a chance they will reach out to me instead?

Ultimately it depends on how much cash you have tied up with them (loans, businesses, insurances, cash etc) whether they will offer you a personal manager or not.

JBmurc
12-05-2021, 09:34 PM
Great to see Heartland bank floating rate to 1.95% p.a. and 1-year fixed to 1.85% p.a. .... hope this puts some more pressure on the likes of Westpac to lower rates

fungus pudding
13-05-2021, 07:34 AM
Great to see Heartland bank floating rate to 1.95% p.a. and 1-year fixed to 1.85% p.a. .... hope this puts some more pressure on the likes of Westpac to lower rates

Yep. That'll send those tax free capital gains on your house, that you frequently complain about, even higher.

JBmurc
13-05-2021, 08:11 AM
Yeah hate those ...dam you free capital !!!!!

silu
26-07-2021, 03:03 PM
Just out of curiosity if your mortgage came up for renewal now for how long would you fix? I thought 3 might be prudent but the rate I got offered by ASB for 2 years sounds interesting.

Fixed 12 months 2.4600
Fixed 18 months 2.700
Fixed 24 months 2.8500

Not asking for financial advise. Just a personal opinion about mortgage rates ;)

winner69
26-07-2021, 04:14 PM
With NZ on the edge and not safe from another covid disaster I can’t see RBNZ lowering rates just yet …..will banks keep their rates down for longer as well?

JBmurc
27-07-2021, 05:59 PM
Just out of curiosity if your mortgage came up for renewal now for how long would you fix? I thought 3 might be prudent but the rate I got offered by ASB for 2 years sounds interesting.

Fixed 12 months 2.4600
Fixed 18 months 2.700
Fixed 24 months 2.8500

Not asking for financial advise. Just a personal opinion about mortgage rates ;)

My two 1yr fixed term loans came up on the 16th of this month I locked it 2.19% with WP week earlier ... quite a jump to 2.55% at present personal I've always just gone for the lowest rate .. I wouldn't count out nil increase from the RBNZ and pure move from the banks to increase profits ...is the quite season for loans Vs the summer months ... wants the bet we will see bank offer sweet summer deals ..

silu
28-07-2021, 08:15 AM
Thanks for the feedback. Despite having been active in the financial markets for over 30 years mortgages are still quite new to me. I've certainly changed my view a bit from being conservative and thinking 3+ years might be the best forward to thinking splitting it half between 1 and 2 years. The jump in rates between 2y and 3y is quite significant.

Guild
25-08-2021, 09:50 AM
Similar question but currently using total money with 100k no interest received and none charged on mortgage, thinking it might be time to use the 100k elsewhere and wondered if anybody thought this was smart or not, would probably end up replacing with 100k for a 2year fixed term.

SBQ
25-08-2021, 11:05 AM
Similar question but currently using total money with 100k no interest received and none charged on mortgage, thinking it might be time to use the 100k elsewhere and wondered if anybody thought this was smart or not, would probably end up replacing with 100k for a 2year fixed term.

With interest rates on Term Deposits so low, why do you want to lock up $100K of cash for 2 years? Gone are the days where you could get 9% with cash and it's not very likely we will see even 5% in the next 10 years.

I had over $1M in cash term deposit 3 years ago that I had to break (yes you lose most of the interest) to buy a house that wifey wont at an auction. It was sold under GV and while hind sight is 20/20, it certainly did a lot better than money in the bank. Not saying future house prices would repeat the same gains but there is a lot to be said about "cash is king". It is king if you're presented with an opportunity.

JBmurc
25-08-2021, 11:31 AM
Thanks for the feedback. Despite having been active in the financial markets for over 30 years mortgages are still quite new to me. I've certainly changed my view a bit from being conservative and thinking 3+ years might be the best forward to thinking splitting it half between 1 and 2 years. The jump in rates between 2y and 3y is quite significant.

Rates cant go much higher without really hurting NZ businesses & Consumers ...we are a HIGH COST(HIGH DEBT) -LOW WAGE economy .... only matter of time till we will see our credit rating come under pressure when it all starts to unravel (most likely from a Global correction thats due any month now) ...

IMHO RBNZ will do a small raise next meeting ...that will be followed by a reduction then negative rates during 2022 as it all comes apart >>

JBmurc
25-08-2021, 11:37 AM
Rates cant go much higher without really hurting NZ businesses & Consumers ...we are a HIGH COST(HIGH DEBT) -LOW WAGE economy .... only matter of time till we will see our credit rating come under pressure when it all starts to unravel (most likely from a Global correction thats due any month now) ...

IMHO RBNZ will do a small raise next meeting ...that will be followed by talks of negative rates again during 2022 as it all comes apart >>

But this course of action will hurt our credit rating.. and no way we will see core I.O drop below 0% ... banks will be forced to pass on lower rates etc

Guild
25-08-2021, 02:48 PM
With interest rates on Term Deposits so low, why do you want to lock up $100K of cash for 2 years? Gone are the days where you could get 9% with cash and it's not very likely we will see even 5% in the next 10 years.

I had over $1M in cash term deposit 3 years ago that I had to break (yes you lose most of the interest) to buy a house that wifey wont at an auction. It was sold under GV and while hind sight is 20/20, it certainly did a lot better than money in the bank. Not saying future house prices would repeat the same gains but there is a lot to be said about "cash is king". It is king if you're presented with an opportunity.

In theory I am receiving for the 100000 in the bank the 2.55% that I would be paying for the mortgage, total money is an offset. If I take it out to do something else with it I would then be paying off a mortgage. So have to weigh up the benefits of just paying back capital or paying back interest and capital and doing some other investing.

smpl
10-07-2022, 01:26 PM
A few people getting burned with their 1 year fixed coming up for renewal.

Aaron
11-07-2022, 09:27 AM
A few people getting burned with their 1 year fixed coming up for renewal.

Big increase but interest rate rises might already be peaking, one more rise in the OCR then it is anyone's guess.

https://www.nzherald.co.nz/business/ocr-preview-rbnz-set-to-hike-again-when-will-interest-rates-peak/5WXAMHGXWKWRK4GWNU7HOP5P2M/

Either way inflation and interest rate rises bad for share prices or lower rates and recession bad for share prices (not if combined with money printing(liquidity) which is what we are all waiting for).

Glad I am not coming up to retirement just yet, some tough choices to make with no way to know what will be best until after the fact. Maybe no options are good if things turn to custard, only less bad.

Logen Ninefingers
14-07-2022, 07:39 AM
‘Interest rates might be peaking’…..that’s what the desperate property shills and the banks want you to think.

Meanwhile, out in the real world….

‘U.S. Inflation Hits New Four-Decade High of 9.1%’

stoploss
14-07-2022, 04:15 PM
‘Interest rates might be peaking’…..that’s what the desperate property shills and the banks want you to think.

Meanwhile, out in the real world….

‘U.S. Inflation Hits New Four-Decade High of 9.1%’
If our CPI comes in high again on Monday , after the Aussie Employment data today and the US CPI , things could be pretty ugly here next week.

Logen Ninefingers
14-07-2022, 04:30 PM
If our CPI comes in high again on Monday , after the Aussie Employment data today and the US CPI , things could be pretty ugly here next week.

It’s a perfect storm of ‘ugly’ for our ‘property ponzi scheme’ economy. As far as the young are concerned they are off to greener pastures, while those that have buried themselves in debt are going to be left holding the bag of excrement.

JBmurc
18-08-2022, 08:40 PM
It’s a perfect storm of ‘ugly’ for our ‘property ponzi scheme’ economy. As far as the young are concerned they are off to greener pastures, while those that have buried themselves in debt are going to be left holding the bag of excrement.

we might well see some FHB just walk away from homes if they owe more to the bank than selling prices in time and do the boost overseas to live...having 90%+ of the bubble price and then be paying 7%+ pa for a property going downwards in value etc >>>

Bjauck
19-08-2022, 02:01 PM
Rates cant go much higher without really hurting NZ businesses & Consumers ...we are a HIGH COST(HIGH DEBT) -LOW WAGE economy .... only matter of time till we will see our credit rating come under pressure when it all starts to unravel (most likely from a Global correction thats due any month now) ...

IMHO RBNZ will do a small raise next meeting ...that will be followed by a reduction then negative rates during 2022 as it all comes apart >>

We are a High debt, low wage, high tax burden on income earners economy which is kept afloat by high net immigration. So now we are in trouble after several years of reduced immigration failed to keep the merrygoaround in motion.

iceman
20-08-2022, 01:11 PM
We are a High debt, low wage, high tax burden on income earners economy which is kept afloat by high net immigration. So now we are in trouble after several years of reduced immigration failed to keep the merrygoaround in motion.

Some truth in that, if you add “generally and increasingly large proportion of society being too lazy to contribute in a meaningful way through hard work & dedication to our common goals for NEW ZEALAND’s prosperity”

Panda-NZ-
20-08-2022, 01:49 PM
Some truth in that, if you add “generally and increasingly large proportion of society being too lazy to contribute in a meaningful way through hard work & dedication to our common goals for NEW ZEALAND’s prosperity”

It's a bit hard when all your hard work is diluted by the record migration.

NZ needs to produce more per hour, not have more bodies thrown into the grinder.

ynot
20-08-2022, 02:06 PM
It's a bit hard when all your hard work is diluted by the record migration.

NZ needs to produce more per hour, not have more bodies thrown into the grinder.

Do you mean get your 100,000 "job seekers" into the workforce.

Panda-NZ-
20-08-2022, 02:13 PM
Do you mean get your 100,000 "job seekers" into the workforce.

Half already do (short term recipients).

Getting absolutely everyone into employment like a soviet society might would lower productivity.