NZ 1st homebuyers are ScReWeD...

[outspoken]

Where did you hear that banks have closed their overseas positions?

I haven't. I bow to your superior knowledge.

The point still remains, banks still have cash to lend & what finance companies are left in NZ that YOU would put your money in?

Are you also implying retail rates won't go lower towards middle of next year?

I understand if you are, just interested in your opinion

[upside_umop]

I haven't. I bow to your superior knowledge.

The point still remains, banks still have cash to lend & what finance companies are left in NZ that YOU would put your money in?

Are you also implying retail rates won't go lower towards middle of next year?

I understand if you are, just interested in your opinion

Banks do indeed still have money to lend...its just getting a lot harder for people to get their hands on it!

I would invest in any finance company that has the G.G. in place on the funds...its essentially risk free, right? So thats FPA finance, CBS, UDC etc any of those to me are fine..I prefer to have my money in more liquid places ie On call.

I think rates will go lower, yes, but not to the extent that everyone thinks. They don't follow the OCR % drop for % drop.

In the USA, the average 1 year ARM is 5.99% whereas the FED target rate is only 1%....The OCR is our equivalent of the FED target rate. So it is entirely possible that mortgage rates might not decrease as some might think, it all depends on how deep a 'freeze' will take place here in NZ. Either way..things will still get worse for housing in NZ.

[outspoken]

Either way..things will still get worse for housing in NZ.

I agree, I went to a conference last week where an AMP Capital Fund manager gave a presentation showing that US house prices needed to drop between 65-75% in some locations to return to the long term trend. He showed that some places in NZ had to drop 30-35% which I related to Bernard Hickeys predictions earlier in the year. Even Bernard has softened on that stance but the fact remains it's a falling knife situation.

But I guess you'd agree, it's not ALL about housing right? Right now and the foreseeable future it's about energy and sustainability?

I understand the retail rate doesn't follow % for % drop in OCR that's how the banks will recapitalise after the budgeted losses (writeoffs) they "leak" to the public. But if they didn't write them off, instead sold them for cents on the $ they might not need the socialist bail outs us taxpayers give them?

Can't find my link sorry, but $30 Trillion is what has been wiped off World Financial markets to date! Scary!

[miner]

The farmer has ten cows in a paddock,there is lots of grass in the paddock so they pig out grow fat and multiply,choice goes the farmer more cows,but then they start to run out of grass so the farmer has to buy in hay,choice go the cows,they multiply some more.

All is going well despite that there is very little if any grass left in the paddock as the farmer can afford the hay and the cows are multiplying until one day the farmer gets a visit from his bank manager who informs him that he has no money left for hay.

All not so good as the farmer now has a heap of cows dependant on hay that he can no longer buy,so his cows start dying and by years end they have gone from 100 back to less than what they started at.

Getting better as there are now only five skinny cows and the grass has a chance to grow again so they start to put on weight again and multiply,the farmer thinks choice.............

ONLY a few of OUR cows have died and there are ALLOT more to go before the grass starts to grow again.

Hope you liked your bedtime story,night.

Cheers
Miner

[minimoke]

Except last three months prices have fallen and peoples expectations of future prices are for them to continue to fall. So yes your right, too early to suggest a turn around in trend! I will go with further falls..

They have only fallen from a high of a year ago – they are the same rates as two years ago. We all should know that property , like everything else is cyclical. And its a long term thing, unlike interest rates which have economist getting all excited about how many basis points it will be this time around.

This is an own-your own home thread – so I’m thinking in context of your own home – not the apartments bought off the plans nor the flash lakeside holiday home or the spec built in the new subdivision. I appreciate its hard to make comparrisoign in such a diverse market – but the first home owners need to look at their situation and not be tainted by the speculators.

If you bought a year ago and have to sell now (without reburying in the same market) you may well be licking a 4.5% wound. If you were speculating on an ever increasing market and trading on the ups – I have no sympathy at all – that’s what risk is all about. If you can’t bear the heat stay out. Nor do I have sympathy for first home buyers who were so highly leveraged that they now have to quit their property – **** happens and theres a lesson there about getting a decent deposit and not being sucked in by banks wanting to lend 110%. We stay in our homes an average of something like seven years – so stick it out. If you are having to off load your house in unforeseen circumstance hopefully you will rebuy in the same market. If the circumstance were forseen – like a redundancy in an sunset industry – well whose fault is that. Bad call, learn from it and move on.

I do have some sympathy for those that have bought on the basis of the hype created by Cullen and Labour and who were not very financially literate. It didn’t help having a government extolling the virtues of your own home – and you will see in previous posts my criticisms of a government pushing people in this direction. There are pros and cons associated with owning your own home. Jeez its the biggest purchase a person will make – you’d think they would give it some decent thoughtand not be sucked in by the governemnt.

[minimoke]

The farmer has ten cows in a paddockr

Um – miner. I think the farmer would run an electric fence and limit the feed – and if he got desperate he’d keep the bull out of the paddock! He’d sell the fat cows to the mug who thinks dairying is the way to go – and make heaps on that sale. Buying feed is just a natural part of farming – if you got cows you just know you are going to have to buy some in at some stage – thats life!

[minimoke]

I think rates will go lower, yes, but not to the extent that everyone thinks. They don't follow the OCR % drop for % drop.

And some banks may already have lowered their rates in anticipation of the drop but t step up the competition. Kiwibank is less than 7% now.

[miner]

Um – miner. I think the farmer would run an electric fence and limit the feed – and if he got desperate he’d keep the bull out of the paddock! He’d sell the fat cows to the mug who thinks dairying is the way to go – and make heaps on that sale. Buying feed is just a natural part of farming – if you got cows you just know you are going to have to buy some in at some stage – thats life!

Maybe I should have used an analogy of pigs at the trough and then you might have got it ?,but then I suppose that's why you are talking the way you are,leave you to it,good luck.

Cheers
Miner

[upside_umop]

And some banks may already have lowered their rates in anticipation of the drop but t step up the competition. Kiwibank is less than 7% now.

This is nothing new, its all about expectations and the forward yield curve.

What I was saying was, if the OCR gets to 0% you wouldnt neccersarily see Kiwibanks rates at 0.75%.

[minimoke]

... a conference last week where an AMP Capital Fund manager gave a presentation showing that US house prices needed to drop between 65-75% in some locations to return to the long term trend. He showed that some places in NZ had to drop 30-35% which I related to Bernard Hickeys predictions earlier in the year.

Does anyone else think its strange how we are comparing the NZ market with the US market (which is apples and oranges anyway) but we didn’t hear a peep from these “experts” on how big our gains would be here in NZ on the back of the rapidly rising US market?

These experts gain market / public credibility from spouting a message that everyone wants to hear. We want to hear about dropping markets in the same way we want to know our grand kids have a very dire life because of global warming and a few people died in a plane crash. Negative news is fantastic media fodder and these “expert” will dress whatever they can up to get in front of people. Bernard Hickey for example is a career journalist – his job is to create a story in such a way that sells his papers (or drives people to his website) He spent most of his time outside New Zealand and his main interests were in digital media. And now he’s the property and interest rate guru whose got slots on radio and TV. Go figure!