Interest Rates

[JBM]

Talking with my local westpac banker on rates I see I could get 5.2-5.3% on a 5yr fixed am I right thinking longer term rates getting pushed down over the last few months my floating rate has been pushed higher twice in only couple of months

[Don't believe the Hype]

Talking with my local westpac banker on rates I see I could get 5.2-5.3% on a 5yr fixed am I right thinking longer term rates getting pushed down over the last few months my floating rate has been pushed higher twice in only couple of months

Long term rates jumped in Dec - Feb period from around 4.8%ish to 5.2-5.4% range... they've moved sideways since then.

[Wayne]

How happy would the punters be if they locked 30 years back in 2010 at 9% -

The rules of the game are known and people can make their own decisions (and commitments) based on what is know.

In my opinion, issues arise when regulatory bodies try to 'fix' short term or 'populist' issues with rule changes that benefit some but impact all.

People weren't happy locked for 3-5 yrs back then - all the angst here on break fees and chasing lower rates.
How quickly people forget.

[Wayne]

Talking with my local westpac banker on rates I see I could get 5.2-5.3% on a 5yr fixed am I right thinking longer term rates getting pushed down over the last few months my floating rate has been pushed higher twice in only couple of months

In Tony Alexander's latest missive he suggested plan for 2% increase in the next couple of years.

If I were borrowing I’d be factoring in a broad 2%
rise in my borrowing costs in a couple of years
time. If you want something more specific than
that then you still haven’t taken on one of the key
messages we have been delivering here for some
seven years now (one message being upward
pressure on house prices, another upside risk to
migration flows). Interest rate predictability went
out the window with the GFC.

[flyernzl]

Imagine, if you will, Kiwi Bank offering a 30-year fixed rate based on today’s interest rate. In other words, your interest rate is set today and will not change, regardless of market forces, over the next 30 years.

So you are asking the taxpayer to go guarantor on peoples housing loans?
(Admittedly that used to be the case. My sister and her husband got a 25 year loan fixed at 3% through the State Advances Corp for her first house back in 1965).

The government’s sole responsibility is to a stable economy and to
offer up economic fairness to the New Zealand people

Are you serious?
What about civil order, a justice system, good roads, clean water supply and so on?

As a people of a nation we have a responsibility to provide a fairness
to all.

Why? Where is that written in tablets of stone?

[Keys]

How happy would the punters be if they locked 30 years back in 2010 at 9%.

I can easily remember when 9% was a dream low rate. Anyone want that now?

[Lanthanide]

You may scoff. But simply ask your parents and grandparents what interest rates were in the 1980’s, and they’ll tell you how it once was.

Don't forget to ask them what the inflation rate was, and what the pay rises they were getting at work were. Also, don't forget to ask them how easy it was to find a job, and how much their student loan repayments cost them.

Interest.co.nz recently had a graph that shows that the 'real' interest rate was actually negative for most of the 70's and the early 80's, due to inflation being higher. Right when most of the baby boomers were buying their first homes.

[Perry]

The easiest and fairest way to force competition into the private housing sector is for the government to directly compete against private (Australian) banks.

Imagine, if you will, Kiwi Bank offering a 30-year fixed rate based on today’s interest rate. In other words, your interest rate is set today and will not change, regardless of market forces, over the next 30 years.

That's the old SAC (State Advances Corporation) model, re-visited. 3% for the life of the loan.

[d2ba]

Yep and they now won't lend on apartments under 65 sm.

Thats news to me ---i thought 45-50 sm was the minimum for 1bedroom apartments.Can you please give us more info on this new rule change
thanks in advance
David

[Wellington Broker]

Thats news to me ---i thought 45-50 sm was the minimum for 1bedroom apartments.Can you please give us more info on this new rule change
thanks in advance
David

This is only a BNZ change. Other banks will still lend on properties at 45m2 - if you present the right deal to a bank they can bend these rules sometimes

[Dunning]

I can easily remember when 9% was a dream low rate. Anyone want that now?

I'll take it now as long as I pay the same price for the property as what people where asking when the interest rate was 9%.

I've been meaning to sit down and figure out the total cost of ownership for a property to look at the total cost. $400,000 @ 9% is the equivalent of $600,000 @ 5%(both $1,158,000 over 30 years)

[brokerman]

This is only a BNZ change. Other banks will still lend on properties at 45m2 - if you present the right deal to a bank they can bend these rules sometimes

Yep, only BNZ. Others reviewing Apartment lending, some maybe to the positive!

[d2ba]

I'll take it now as long as I pay the same price for the property as what people where asking when the interest rate was 9%.

I've been meaning to sit down and figure out the total cost of ownership for a property to look at the total cost. $400,000 @ 9% is the equivalent of $600,000 @ 5%(both $1,158,000 over 30 years)

So do you think if interest rates hit 9% again property will be devalued as per formula above? I was thinking commercial property in particular?

[Nick G]

I'll take it now as long as I pay the same price for the property as what people where asking when the interest rate was 9%.

I've been meaning to sit down and figure out the total cost of ownership for a property to look at the total cost. $400,000 @ 9% is the equivalent of $600,000 @ 5%(both $1,158,000 over 30 years)

I worked out a while back that a 10% increase in IR would negate a 10% drop in values - ie the servicing cost is the same.

[Bob Kane]

Erewhon is still erehwon, I don’t see it changing anytime soon..

exnzpat!
Welcome back.
I thought you were killed by a rabid dog in north Canada?