Interest Rates

[BigDreamer]

ASB rates are terrible (as usual)!

Yes, the rates are terrible but for providing $3k cash contribution for just over $250k is a good deal.

[donthatetheplayer]

Plus they will match my ANZ floating rate of 6%.

Really? ANZ are floating you at 6%? I've got a 0.75% margin off the listed rate. Have you got 0.85% off with ANZ? What level of lending do you have with them?

[PTILoveYou]

Yes, the rates are terrible but for providing $3k cash contribution for just over $250k is a good deal.

Yeah for $250k mortgage your deal is good.

[Maccachic]

Work colleague just got 4.99% from SBS moving from ASB via a broker

[Wayne]

Work colleague just got 4.99% from SBS moving from ASB via a broker

for how long?

[Maccachic]

for how long?

Oops meant to put that 5 years

[eri]

4.99% for 5yrs

interest rates certainly still moving down

[Perry]

Hell for deposit holders, eh wot?

[eri]

kiwi bank offering 4.6% for 3yr term deps

don't know how they can

https://www.kiwibank.co.nz/personal-banking/investments/term-deposits/

[Perry]

Credit Union is 5.2% for 3 years.

[Neongreen]

Credit Union is 5.2% for 3 years.

Wait a moment, I didn't realize this had happened - you could conceivably mortgage your house and reinvest it to earn a pretty low risk return. 5% at 5 years reinvested with CU at 5.80%, means you get an easy .8% of your loan balance a year. Plus say a $x,000 new loan bonus.

Of course, there's the risk that NZCU will fold, but I suspect that is relatively unlikely.

[Wayne]

Wait a moment, I didn't realize this had happened - you could conceivably mortgage your house and reinvest it to earn a pretty low risk return. 5% at 5 years reinvested with CU at 5.80%, means you get an easy .8% of your loan balance a year. Plus say a $x,000 new loan bonus.

Of course, there's the risk that NZCU will fold, but I suspect that is relatively unlikely.

arbitrage - I think tax could be the killer but you claim on one and pay on the other so ...
For 0.8% it seems like a heck of a lot of risk.

[Wayne]

Tony Alexander had some interesting comment in his latest mailer

At some stage possibly before mid-year, the anticipation of tightening monetary policy in the United States will place upward pressure on NZ fixed borrowing costs. Borrowers may want to consider fixing before then, taking advantage of the strong and increasing competition between lenders for mortgage business.

[Anthonyacat]

I thought Tony killed his mailer? Or is it operating under a different name now? Will go have a look. I miss reading his comments each week.

As for the TD vs Mortgage arbitrage, there are two drawbacks. The first is that you pay a mortgage monthly, but most term deposits pay on maturity. So you lose out based on compounding returns. The second is that even if it did pay monthly (no way it does, with that rate) they deduct RWT at 10-33%. Sure, you get it back when you file your return, but in the meantime you need to finance that shortfall from your own pocket.

[Perry]

The second is that even if it did pay monthly (no way it does, with that rate) they deduct RWT at 10-33%.

No way it does? Depends. This from that TD rates page:

Our competitive interest rates are calculated on a daily basis and can be paid at regular intervals . . .

Of course, how regular is regular?