Interest Rates

[Hound]

I believe we're going into at least a medium term low interest rate environment. People need to forget about the 1980's.

[eri]

ASB joins Westpac in forecasting OCR dropping to record low of 2 per cent

http://www.stuff.co.nz/business/74309445/asb-joins-westpac-in-forecasting-ocr-dropping-to-record-low-of-2-per-cent

[Frezzinghot]

We are refinancing ALL our loans shortly, some with TSB & some with SBS. Good to hear we should get some of the best rates since we started!!!!

FH

[Judge]

You do not need to refinance with sbs to get their rate. Just tell your existing bank you will walk to get this rate and voila! Your bank will most often match it or give you something very close. In my experience anyway.

[Frezzinghot]

We are going with them anyway as we had to move to get finance for trading and the MS banks would not allow this hence our move.

FH

[Bluekiwi]

I have a small amount fixed at 6.85 for another 2 years I think.

At the time that was a fantastic rate to get.

Interesting times, that can do only one thing for property.

[Wayne]

This article should give some idea on where long rates might go.

http://www.interest.co.nz/bonds/78771/asb-bnz-rake-combined-nz900-million-through-bond-issues

Seems like the BNZ paid a lot more money for their 5 years than the ASB.
The BNZ ones are riskier than the ASB ones and tou get an extra % for that.
But all this must translate into 5yr mortgage rates sometime you would think.

[eri]

as has been said here before

the outlook is for flat

followed by flat

with a long term outlook of flat

so yes

imho

5 years rates will fall below 3.99%

sooner rather than later

unless

some currently unforeseen even happens that makes money scarce again

but it's really hard to see what that would be

as current economic theory suggests

pumping more money into the economy

is the only politically viable cure

for any economic ill

(including having too much money in the economy!)

[Wayne]

5 years rates will fall below 3.99%

The bit I don't understand is why would the BNZ and ASB borrow 5 years at 4-5% if they saw the rate falling below 4%?

[ivanp]

As I read from the article:

1) ASB borrowed 5 years at 4.245% - they will probably lend it at 4.99% or close, and maybe the volume they just borrowed is enough for the few upcoming months, but will be over by the time rates fall below 4% ? Then they will borrow more (at lower rates) to lend more?

2) BNZ borrowed at 5.314%. which doesn't make any sense to me as that's above their 5-year lending rates. How do they not loose any money here? I don't understand what's going on here. Did they raise these $550m for other lending such as credit cards?

[Wayne]

Banks have recently been told to match the terms between their borrowing and lending given the GFC experiances.
So not sure borrowing 5 years to cover CC is logical.
You are probably on the button re this covering a few months lending.

[Anthonyacat]

https://www.interest.co.nz/news/78774/sbs-bank-launches-399-one-year-fixed-mortgage-rate-setting-new-low-benchmark-home-loan

3.99%!

[Wayne]

https://www.interest.co.nz/news/7877...mark-home-loan

3.99%!

Been covered in post 4301.
The offer has caveats -
It is available for "new lending over $100,000", for residential "owner-occupier properties" only.
And borrowers will need to have at least 20% equity in the secured property.

[Damap]

I will be ecstatic if we see 5 years at sub 4% but I don't believe it either :-)

[eri]

in the long run it'll happen

but any gains made

will be taken by increased taxation

in all its many forms