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  1. #16
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    Quote Originally Posted by Dr_Who View Post
    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.

  2. #17
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    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 !!

  3. #18
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    Your tenants holding their chin up GGG? Would be interested to hear what your experience is. I hear only moans around, and growing ...

  4. #19
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    floating rates are going down..........
    why on earth would people want to fix into higher rates?????

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

  5. #20
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    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 - after my 2nd attempt (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
    Last edited by foxysfolkfaced23; 13-08-2009 at 02:35 PM.

  6. #21
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    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.
    For clarity, nothing I say is advice....

  7. #22
    Guru Dr_Who's Avatar
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    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.
    Having got ourselves into a debt-induced economic crisis, the only permanent way out is to reduce the debt either directly by abolishing large slabs of it, or indirectly by inflating it away.

  8. #23
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    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.

  9. #24
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    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 !!

  10. #25
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    Cheers mate. Thanks for a bit of your sunshine ...

  11. #26
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    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.

  12. #27
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    Quote Originally Posted by neopoleII View Post
    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.

  13. #28
    Guru Dr_Who's Avatar
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    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.
    Last edited by Dr_Who; 14-09-2009 at 07:59 PM.
    Having got ourselves into a debt-induced economic crisis, the only permanent way out is to reduce the debt either directly by abolishing large slabs of it, or indirectly by inflating it away.

  14. #29
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    Quote Originally Posted by neopoleII View Post

    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.

  15. #30
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    Quote Originally Posted by minimoke View Post
    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.
    Last edited by Ptolemy; 15-09-2009 at 01:28 PM. Reason: typo

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