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  • Originally posted by drelly View Post
    The US have just put through another increase to their quantitative easing to the tune of $45B a month. That takes it to a massive $85B a month. Eventually we have to see some serious inflation but for the same reason the US dollar should drop further against the NZD. What the hell is going to happen???
    Well that's the $64 million dollar question. It's a strange new world out there I reckon.

    House and commercial property prices at all time highs, interest rates at all time lows.

    The US, Japan, UK all printing money.

    Europe wallowing in debt.

    I have no idea what will happen.
    Squadly dinky do!

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    • But it wont be Pretty

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      • Originally posted by Davo36 View Post
        I have no idea what will happen.
        That's pretty much all I've come up with! However, I am reassured that our Government debt is considerably lower than most of the rest of the western world. Also the margin between the OCR and retail rates allows some room to breathe before rates rise. Perhaps the NZD will now become the world's reserve currency?

        Originally posted by skid View Post
        But it wont be Pretty
        I have my finger hovering over the "fix everything for 5 years" button but can't bring myself to push it yet!
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        • Originally posted by drelly View Post
          Perhaps the NZD will now become the world's reserve currency?
          Good one Drelly.

          I have my finger hovering over the "fix everything for 5 years" button but can't bring myself to push it yet!
          and in 5 years time you will hit a sudden crunch of all your fixed coming off at once at a higher rate.

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          • Originally posted by drelly View Post
            That's pretty much all I've come up with! However, I am reassured that our Government debt is considerably lower than most of the rest of the western world. Also the margin between the OCR and retail rates allows some room to breathe before rates rise. Perhaps the NZD will now become the world's reserve currency?

            I have my finger hovering over the "fix everything for 5 years" button but can't bring myself to push it yet!
            Yep me too, I have had my finger hovering a while.
            But someone on here came up with the concept that the 6 month rate is the "new floating", so I am moving into that as I can.
            Which also matches up with what Tony Alexander was saying.
            Which was to do short term fixes of up to a year, and then break and fix longer term if something decent comes along.

            This strategy covers both bases of what the different economists say, of no rate increases for ages, and rising rates end of next year.
            Quite divergent views.

            That strategy could cover you out to 5 to 7 years, maybe even 8.
            More dangerous would be to fix for 2 years or 3 years and come out of that in a high interest rate environment.
            Covering yourself for 5 to 8 years offers more certainty isn't that right Wayned.
            Last edited by Perry; 18-12-2012, 05:41 PM. Reason: fixed typos

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            • When I looked at my risk I determined that the biggest one (within my control to some degree) was interest rates. To have all my loans come off fixed at the same time at some future point and enter a high interest environment would not be good. So I decided that the best way is to stagger the 10 or so mortgages that I have over differant periods. At the moment I have a mix of 6mth, 1 year and 2 years but soon will have to look at a few 5yrs to reduce the risk.

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              • Originally posted by Bluekiwi View Post
                But someone on here came up with the concept that the 6 month rate is the "new floating", so I am moving into that as I can.
                Yes, I like that idea too. As long as the bank don't smother me with application forms!

                Originally posted by Wayne View Post
                ...and in 5 years time you will hit a sudden crunch of all your fixed coming off at once at a higher rate.
                Probably, but if we we're assuming a steady rise over 5 years, I'd save more money by fixing all at once than staggering fixed terms.
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                • Yes I agree with that last part Drelly. You don't save money by staggering the loans do you?

                  You just don't get one big rise all at the same time. You get a series of smaller rises in interest payments which will actually be bigger (in total) than if all the money came off a low fixed rate at the same time.
                  Squadly dinky do!

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                  • Originally posted by Davo36 View Post
                    Yes I agree with that last part Drelly. You don't save money by staggering the loans do you?
                    You just don't get one big rise all at the same time. You get a series of smaller rises in interest payments which will actually be bigger (in total) than if all the money came off a low fixed rate at the same time.
                    No, you don't. That's the same logic that financial advisers use to recommend "diversification". It might reduce risk but it doesn't save money or increase profits.
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                    • So long as you time when your interest rates come off and they come of during a dip in the cycle you will be find. Could be that you come off at a peak then ... Same reasoning with diversification, you don't get all the ups but don't get all the downs either!

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                      • I have my finger hovering over the "fix everything for 5 years" button but can't bring myself to push it yet!
                        Likewise - but can I please have 5.5%?

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                        • Noticed a couple of interest rate drops.
                          ANZ 6mth 5.25% and 1yr 5.25%
                          Kiwibank 3yr 5.65%, 4yr 5.99% and 5yr 5.99%
                          "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

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                          • Slow growth to keep rates on hold

                            20/12/2012

                            Sluggish economic growth is likely to keep interest rates on hold for a little longer, potentially adding more fuel to the overheated housing market.
                            Source
                            Patience is a virtue.

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                            • I suspect NZ Mortgage interest rates have further potential to move lower. Yesterday we received a nice Chrissy present from Bank Austria: as of January our floating rate drops to 1%. { Last Inflation measure in Austria: November = 2.8%)
                              The mission of any business enterprise should include the aim to develop economic conditions rather than simply react to them.

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                              • Interest rates in a major sovereign crisis

                                This may be a bit of an "out there" question, but in the event of a sovereign bond crisis, amid inflation due to money printing:

                                Would a spike in the sovereign bond interest rates (in say the US or large western European financial centres) result in a rise in interest rates across the board here? IE. in the wholesale markets that lend to Aussie and Kiwi banks?
                                Last edited by Systemic Risk; 08-01-2013, 03:40 PM.

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