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  • Yeah.
    If they were any good the companies they work for would be making huge record profits.

    Comment


    • Did anyone else go along to this morning's breakfast hosted by ASB at eden park?
      Governor Wheeler talked about interest rate paths, house prices etc.
      At Q&A, he was asked about the new LVR rule and what he thought about FHBs missing out. The governor provided a detailed answer starting with his time with the World Bank in the US during the GFC. He observed a quarter of mortgages go into negative equity, and if you add those with under 5% equity, adds up to 34% of all mortgages in the US. The median American had 30% of net wealth wiped out.
      *stats are approx based on what I could remember.

      Having seen what could happen, and given NZ house prices increased at the fastest rate amongst all 34 OECD countries between 2003-2007, he is very concerned about current house price trends.

      Just judging from the way he's talking, sounds to me like interest rates will be going up sooner than we're all expecting.

      Comment


      • Originally posted by speights boy View Post
        If they were any good the companies they work for would be making huge record profits.
        The proof of the correlation being?

        And they were as accurate at forecasting the GFC, as
        Tony says they are at picking interest rate trends.
        Does that seem about right?
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        • Originally posted by Perry View Post
          The proof of the correlation being?
          The bank's economists are part of the after guard helping to call the shots for the skipper.
          If they weren't calling the right tactical decisions they would be off the boat.
          The end result is a large winning margin for the banks, as evidenced in their annual reports.

          Comment


          • Sounds rather vaguely implausible, to me.
            Using real definitions, what are these things
            referred to as after-guards and skippers?

            Remind me, how well did they (either after-
            guards, skippers, or bank economists), do
            with predictions for the GFC?

            If they failed, how many of them were
            made to walk the plank (off the boat)?

            Further, did bank profits look appallingly
            bad before they started employing econo-
            mists? A fairly recent phenomenon in the
            history of banks, as I understand it.
            Last edited by Perry; 13-09-2013, 08:04 PM.
            Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

            Comment


            • Using real definitions, what are these things
              referred to as after-guards and skippers?
              CEO would be the skipper.
              After guard would be their management team.
              Pardon me for reveling in the performance of our Americas Cup Team.
              Remind me, how well did they (either after-
              guards, skippers, or bank economists), do
              with predictions for the GFC?
              Very well when it came protecting their boat, as they sought shelter from the storm that claimed many others.
              Their conservative design features held them in good stead.
              Their parent banks across the ditch even more so.
              If they failed, how many of them were
              made to walk the plank (off the boat)?
              Not applicable; as above.
              Further, did bank profits look appallingly
              bad before they started employing econo-
              mists?
              Don't know. Perhaps not.
              However we know that each announcement of yet another record profit is met with joyful celebration.

              Comment


              • Adroitly Avoided (Evaded?)

                Originally posted by speights boy View Post
                Very well when it came protecting their boat, as they sought shelter from the storm that claimed many others.
                Their conservative design features held them in good stead.
                Their parent banks across the ditch even more so.
                No evidence adduced that the conservative design
                features
                were the creation of bank economists. It
                could well have been RBNZ policies and nothing to
                do with bank economists, at all. Unless you can ad-
                duce evidence to the contrary, of course.
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                Comment


                • Congratulating the bank economists employed by the Reserve Bank of NZ is high praise indeed, coming from yourself.
                  They will be most happy to know how appreciative you are.

                  Yes, you are correct in that the RBNZ is in charge of setting the design rules, and regularly measuring all the boats to ensure they comply.
                  All our banks of course go beyond these minimums, and build in their own additional safety features.

                  As Aotearoa buried a hull round mark 3 last month, but popped right back up, they were very pleased to be onboard what had been dubbed the Massey Ferguson design.
                  Last edited by speights boy; 13-09-2013, 09:26 PM.

                  Comment


                  • Originally posted by speights boy View Post
                    Congratulating the bank economists employed by the Reserve Bank of NZ is high praise indeed,
                    coming from yourself. They will be most happy to know how appreciative you are.
                    Originally posted by Perry View Post
                    It could well have been RBNZ policies . . . of course.
                    Alas, "it could well have been" does not constitute praise.
                    Rather, just speculation on possible alternatives. For all
                    I know, it could be prudence on the part of some or all
                    banks' Directors.

                    My point is - and remains - where is the corroborated and
                    cogent evidence that economists are in any way a contrib-
                    utor to NZ trading bank profits, as you seem to allege. Is
                    that your stance? Or have I mis-perceived?

                    Remembering this discourse was prompted by a bank econo-
                    mist reported as saying that no one had successfully pre-
                    dicted interest rates, in recent memory. I'm presuming that
                    includes bank economists.

                    If that's so, the reason for bank economists is . . . .
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                    Comment


                    • Hi Please advice best options to fix loan with looming interest rate hikes, thanking you in advance.

                      Comment


                      • Start reading this thread from about four weeks ago. Lots of hints there.
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                        • The LVR restrictions are starting to bite.
                          Not only are interest rates going up without the OCR, but the riskiest loans are more expensive still.
                          Mr Wheeler will not be unhappy.

                          RBNZ LVR policy bites
                          Westpac has announced new higher mortgage rates for borrowers who have less than 20% equity in their home.

                          At the same time, they have repositioned their standard rates as being for those who have at least 20% equity or more.
                          This is a switch in focus, responding to the RBNZ macro-prudential policy moves to introduce LVR "speed limits".

                          Previously, 'standard rates' applied to all borrowers and specials were usually targeted at high equity loans. Now that is reversed.

                          Comment


                          • A rate war will start with lenders ready to take the gloves of to bring in refinances. Refinances for less than 20% deposits are exempt from the Reserve Bank restrictions.

                            So clients could theoretically buy a home with a finance company and then refinance to another bank at a better rate. Or strangely get an expensive home loan from a bank and then be the target of another banks refinance target.
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                            • Originally posted by mortgage broker View Post
                              Refinances for less than 20% deposits are exempt from the Reserve Bank restrictions.
                              My understanding is only for 3 months, ie: end of the year.
                              Is that correct ?

                              Comment


                              • No tapering.
                                Fixed rates might start falling shortly.

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