Interest Rates

[brokerman]

I don't forsee a cut either. I think they did their bit yesterday.

Agreed, nothing showing on the horizon, either locally or globally indicates anything other than either rates staying the same or a reduction. Had an interesting conversation with a Bank economist the other day, we were talking about the Eighties. Rates on average were double what they are today yet between 1980 and 1990 property prices in Auckland went up by 350%. Even in todays loony market I can't see that replicating itself.

[Meehole]

Agreed, nothing showing on the horizon, either locally or globally indicates anything other than either rates staying the same or a reduction. Had an interesting conversation with a Bank economist the other day, we were talking about the Eighties. Rates on average were double what they are today yet between 1980 and 1990 property prices in Auckland went up by 350%. Even in todays loony market I can't see that replicating itself.

First house we purchased in 1985 we paid 21.75% interest. Had to have a 20% deposit and could only have 1 mortgage. Had to have had a home ownership account for 2 or 3 years (that long ago now can't remember that detail)

[brokerman]

Wow! In the UK rates went to 16% from memory, hurt like hell but the values kept on climbing!

[JBM]

First house we purchased in 1985 we paid 21.75% interest. Had to have a 20% deposit and could only have 1 mortgage. Had to have had a home ownership account for 2 or 3 years (that long ago now can't remember that detail)

And the average local income to property value was most likely very low ....so the actually load on the average family wouldn't have been any worse that's for sure ...

when I first started my job late 90's I could have brought a nice house in Queenstown for 2.5 times my income the same house today 10-11 times .... now rates are around half what I would have paid back then .....

and worse of all my income hasn't gone up much at all over these years working in the export sector >>>>

[EMScott]

I was quoted 4.69% for 5 years and $4500 recently 600k borrowing

[brokerman]

I was quoted 4.69% for 5 years and $4500 recently 600k borrowing

I hope you took it!

[elguapo]

Agreed, nothing showing on the horizon, either locally or globally indicates anything other than either rates staying the same or a reduction. Had an interesting conversation with a Bank economist the other day, we were talking about the Eighties. Rates on average were double what they are today yet between 1980 and 1990 property prices in Auckland went up by 350%. Even in todays loony market I can't see that replicating itself.

Between 1980 and 1990 property prices in NZ when up 391%
Wages in the same period when up 275%

Inflation in 1980 was 17%, interest rates were north of 20%.

The difference today is that houses in Auckland are increasing in price at a much higher rate than either wages or inflation than they ever have before.

[Judge]

Westpac hypocrisy. Always jumping in first to do something that is negative for investors.

http://www.interest.co.nz/property/82694/westpac-pulls-shutter-down-now-lending-investors-over-60-lvr-ahead-introduction-new

But i bet they will be the last to pass on any OCR cut, and will also pass the least (if any).

[Aston]

Westpac hypocrisy. Always jumping in first to do something that is negative for investors.

http://www.interest.co.nz/property/82694/westpac-pulls-shutter-down-now-lending-investors-over-60-lvr-ahead-introduction-new

But i bet they will be the last to pass on any OCR cut, and will also pass the least (if any).

Bracing themselves, I might switch to Westpac.

Only the lunatics are buying (in Auckland) now anyway.

[brokerman]

Only Bank left as far as I know is ANZ at 70%, they will continue issuing pre-approvals until August 10th they tell me but in view of all others changing, they may change too! Thank goodness for alternatives. (Edited just now. ANZ have announced they will no longer accept pre-approvals)

[Wayne]

Westpac hypocrisy. Always jumping in first to do something that is negative for investors.
http://www.interest.co.nz/property/8...oduction-new .

They may have been 1st but it would seem only by hours.

[Judge]

They may have been 1st but it would seem only by hours.

And, if only by hours, they will be the last to pass on any OCR cut.

[Wayne]

And, if only by hours, they will be the last to pass on any OCR cut.

You may well be right - they do seem tardy.
But what terms should they be passing on any cut to - floating , 6mth, 1yr, 2yr?
How do you see this should work?

[Judge]

The yield curve is effectively flat. The market has already priced the OCR cut into fixed rates. The banks can be passing it on today. Floating depends on the actual OCR, so they should be passing the OCR cut to floating the same day as the announcement is made. That is if they want to live the spirit of what reserve bank is trying to achieve like they say they do (they don't).

[Wayne]

so they should be passing the OCR cut to floating the same day as the announcement is made. That is if they want to live the spirit of what reserve bank is trying to achieve like they say they do (they don't).

You are right - they don't.
None of them do, they pass on some of it and increase their margin with the rest.
Westpac certainly does seem to be the slowest.

As for the 60% bit - they weren't really quicker than the rest!