Interest Rates

[drelly]

Who was the lender Dog?

[tamara]

wow

[Poi]

doing your sums

Hi All

Being very new and at this point in time excited and nervous about the whole property investment game, we have always judged a deal on a piece of advice given to us right at the start. When crunching the numbers ALWAYS make sure that the profit is still there even with a 2% interest rate hike. We can all fix rates and all predict the future, but bless the mortal who can truly tell who or what will raise or drop the lending rate in this country ????

Its just advice but give it a try..............might help some people sleep

Poi

[The_Dog]

My lender (in this case) is the ASB, I been with them for over 10 years and find them very very good. I never pay fees to adjust my loans either. They want to hold my business and I am more than happy for that. In fact, I'm about to extend my borrowings with them. I hit the buffer (4 houses) for personal borrowing (before being elevated to business banking) but they have now relaxed the criteria and I can borrow more.

I think a lot of it has to do with my particular ASB Account Manager, or Personal Relationship Manager as they call them, but it is exactly that - a 'personal' relationship built up over the years.

I'm gushing a bit, however I can't recommend ASB enough. Very responsive, flexible and professional. Mind you, I keep up my end of the bargain and never miss a payment.

The Dog

[drelly]

Something The Dog said has struck a chord... the "buffers" or rules that the banks use to determine suitability for a loan. I don't know about the others but Westpac keep their guidlines very close to their chest. They have a 30% of income rule and also the 20% equity rule (and probably others!) but I have no clue about whether or not this changes after a certain amount of property or borrowing. Any clues?

[orion]

They have a 30% of income rule and also the 20% equity rule (and probably others!) but I have no clue about whether or not this changes after a certain amount of property or borrowing.

Banks at a local branch level will usually say that you can only borrow funds to buy 3 or 4 properties, then you will treated as commercial and therefore only be able to borrow 60% and may get charged higher interest rates. This is usually in fact not true at all. You just need to visit the commercial lender with the same bank for a different answer. Until your overall borrowings get to somewhere between $500,000 to $1,000,000, you would be best to use your local branch, or a mortgage broker. ANZ have a poilcy of only $1 million borrowing before changing it all to 60% borrowing, so you need to stay within that limit. As far as I know, the other banks don't have a similar limit and in fact, often the more you have borrowed, the easier it is to borrow even more. The interest rates with larger borrowings tend to go down, not up - as some of the lenders at branch level will tell you.
One of my wrapee clients wants to invest in property in the near future and went to his bank at local branch level, saying he wanted to buy 50 properties in the next 10 years. The guy laughed at him and said it was impossible to do, unless you are already very wealthy. Needless to say, he will find someone at another bank who can see past his own nose.

Regards
Graeme Fowler

[muppet]

Hi Guys

More interest rate movements.

Westpac have dropped their 1yr fixed rates to between 6.90% and 7.15%
and their 2 yr fixed rate to btween 7.15% and 6.95%.

Also their specials are 18mth, 6.85% and 30mth, 6.99%.

Kiwibank has also adjusted rates.

Regards

[muppet]

Hi Guys

Well what do you know, NONE of the big banks have fiddled with their interest rates this week.

However some of the Financial Institutions have dropped some of their fixed term rates.

I wonder what will happen next week?

Regards

[graemeh]

I'm picking BNZ to drop their fixed rate further. They seem to be very agressive at the moment.

They have good discounts and seem willing to accept smaller properties as security (although only at 75%).

I was in a branch yesterday asking if they would do something outside their normal policy and they said yes. I think the person I was speaking to had just completed the "how to sell mortgages" course but she was bright enough to realise the standard sales pitch of how to pay of your loan faster would not work on me. When I asked a few questions about a loan arrangement that most banks won't touch she asked their regional credit manager who said yes!

I've been deliberately vague because I don't want to say what they have agreed to. I should know for certain next week that they will do what I want as I have an appointment to go through a loan application.

Once I have it in writing that they will do what I want I will report back in case others would like to do the same thing. Here's a clue on what I'm trying to do: It's something that makes sense to me, it's something they already do but normally takes longer and 4 brokers and one lending manager I have spoken to say it can't be done, one broker said it was difficult and probably couldn't be done but he would try.

[Gerrard]

Tune in next week when you'll hear Dr Bob say...

Just kidding. You have me intrigued Graemeh. I'll be witing for the next installment.

Gerrard

[muppet]

Hi Guys

Have noticed some interest rate movements today with most being upwards.

Regards

[muppet]

Hi Guys

More interest rate movements tonight AND all upwards.

TSB, Nat, ANZ and Westpac have raised their rates although Westpac's increase is larger than the others.

Refer to http://www.interest.co.nz/mortgages.html

Regards

[Gatekeeper]

Inflation to rise, growth to stall
By Peter Weekes
April 17, 2004

http://www.theage.com.au/articles/2004/04/16/1082055649763.html

<snip>
Home owners beware. It is looking more likely that interest rates will soon rise - and rapidly.

Almost four in five fund managers think inflation will jump this year as companies are forced to increase prices to maintain sagging profits, according to the Merrill Lynch global survey.

Even strong macroeconomic data, such as robust US jobs growth, failed to alter the view of fund managers that growth and profits were slowing.

"For the first time in years, more fund managers believe higher selling prices, not lower costs, will drive corporate earnings," said David Bowers, Merrill Lynch's chief global investment strategist. "This survey has all the markings of a mid-cycle pause, with fund managers preparing for a more inflationary late-cycle phase."
>>

[muppet]

Hi Guys

There have been several minor changes in interest rates this week, mainly upwards.

Regards

[Mark_B]

I can't say I have any knowledge of the NZ situation, but it was certainly the case in Australia last year that the commercial banks made a move before the Reserve Bank of Australia did.

FYI - Recent comments attributed to the RBA.

*********
RBA warns property too hot

http://afr.com/articles/2004/04/14/1081838794353.html

Australian Financial Review, 15 April 2004

Reserve Bank governor Ian Macfarlane yesterday warned that the rate of lending for housing was unsustainable, despite a decline in finance approvals in recent months, signalling a mild bias at the central bank towards raising interest rates.

Mr Macfarlane said managing monetary policy had become easier since the Australian dollar had stopped rising and credit growth had slowed. However, he said the jury was still out on whether these trends would be sustained.

*******

Not to forget, of course, the noises coming out of the US Fed (with a 1% interest rate, up seems to be the only way they can go).

MB