Interest Rates

[PTILoveYou]

All illusionary - they haven't 'lost' money.
May have paid more interest than another option but you can't do this in hindsight picking optimum periods to look at.

Yeah true, hence we have this discussion =)

[Wayne]

Yes I agree it is a gamble.

But the good thing about losing money (thanks for the grammar correction, english is my 3rd language), the bigger the loss, the longer the memory lasts.

I prefer to learn from other mistakes as well as my own - gets me to the end game faster.

[Davo36]

Property investing is easy if you take action at the right time, and with the right coaching.
www.Ronovationz.com

Man, I've seen this kind of sentiment before. It's all easy, just borrow, borrow borrow etc.

Don't get too carried away Gary, don't borrow too much.

[elguapo]

But the good thing about losing money (thanks for the grammar correction, english is my 3rd language), the bigger the loss, the longer the memory lasts.

Not true, people delete memories of losses, they only remember wins. This is why casinos and betting shops get return customers.

[speights boy]

^ Correct.

Subject memory assessment in the Soochow Gambling Task. Forty-eight subjects were required to report their behavior and preferences after completion of the game. (4A)
Most of the sample (36 subjects) had vivid impressions for high-frequency gain decks (A+B) (x² (1) = 12.00, p < .01), (4B) but not high-frequency loss (C+D) (x² (1) = 0.00, p = 1.00). (4C)
Additionally, most subjects (31 subjects recognized decks A and B) possessed a clear (but wrong) image for the overall monetary gain (x² (1) = 4.08, p < .05); (4D) but a blurred image for overall monetary loss (x² (1) = .08, p = .77). (4E)

After completing the game, subjects erroneously equated the high-frequency gains as the overall advantage.
Thirty one out of forty eight subjects indicated the favorable choice to decks A and B rather than C and D (x² (1) = 4.08, p < .05). (4F)
Most unfavorable choice they had memorized were decks C and D which possessed the high-frequency loss and positive expected value (x² (1) = 8.33, p < .01).

[Perry]

And not a bad thing in itself. I see credit card spending has jumped and the number
paying the card in full every month reduce slightly - some habits are hard to break.

Have the paid-in-full-each-month figures been getting more prominence? I have
had little luck finding them, when reading about increases in CC spending.

[speights boy]

Try clicking on the 2nd xls spreadsheet at top of table.
C12 2000-current.
Then see Interest bearing advances outstanding.

www.rbnz.govt.nz/statistics/tables/c12/

[PTILoveYou]

Not true, people delete memories of losses, they only remember wins. This is why casinos and betting shops get return customers.

Well I'm completely opposite then, losses make me who I am today.

And I dont go to casinos or betting shops.

[GenY]

Has anyone fixed for 6.5% for 5 years back in 2009??

How do you feel now that you have lost money during the term?

Hi Gary
Yes I fixed at that rate for two of mine back then. No regrets 5 years of P&I and additional payments means they are cash flow neutral ie rents cover all outgoings. So all I need to do is find a rate at 6.5 or lower in a few months and they will continue to pay themselves off. Good thing about 2009 was it was the bottom so go the properties cheap and the current value are up 50% - damn should have bought more back then! Oh well roll on next bottom of the cycle ? 2017

Question for you- with the interest only when do you start having to pay down the principle and can the banks force you to start paying it back earlier?

[PTILoveYou]

Question for you- with the interest only when do you start having to pay down the principle and can the banks force you to start paying it back earlier?

Yep 2009/2010 was a great time, wish I purchase more too, but I was a novice then.

I guess I will find out during the next down turn around 2017, when banks start to alter the lending rules to suit their needs again.

I heard banks did that to their customers back in 2008/2009, but I will have a low LVR by then (already below 50%), so I probably won't be on their radar.

[Learning]

Question for you- with the interest only when do you start having to pay down the principle and can the banks force you to start paying it back earlier?

I'm quite interested in the answer to this one too. I've got a $500k interest only mortgage for my rentals which I refixed for 5 years straight after it came off a 4 year fixed term. Is this completely normal that a bank will roll over interest only or is it only because I'm making good progress on my personal mortgage that they are giving me that leeway?

[orion]

Yep 2009/2010 was a great time, wish I purchase more too, but I was a novice then.

I guess I will find out during the next down turn around 2017, when banks start to alter the lending rules to suit their needs again.

I heard banks did that to their customers back in 2008/2009, but I will have a low LVR by then (already below 50%), so I probably won't be on their radar.

Gary,

How do you know there will be a downturn around 2017????
Also, you mentioned your loans are all interest only, so are you planning on making lump sum payments to bring the LVR rate to below 50%, or are you ASSUMING the properties will go up in order for that to happen.
You mentioned you were a novice at the start of this post, I don't see any evidence to see that has changed, unless I'm missing something?

Regards
Graeme

[elguapo]

How do you know there will be a downturn around 2017????

He's got one of these;

http://www.trademe.co.nz/toys-models...-690681654.htm

Good investment for $29.95.

[Davo36]

Oh come on you guys, leave Gary alone. There will be a downturn in 2017 because Ron says so.

Now Ron may have been wrong about the last downturn timing but hey, cut him some slack. You can't get more mentoring students if the downturn is like tomorrow, it has to be a few years out. Far enough away so that the students can get in and buy.

Then of course when it does hit, you turn into a mentor who helps people with problems etc. It's all gold baby.

[elguapo]

Oh come on you guys, leave Gary alone. There will be a downturn in 2017 because Ron says so.

Does he say why?