Interest Rates

[Bluekiwi]

Longer term money is borrowed by the banks at international rates so doesn't matter what happens here in NZ.

Unless things went really bad here, in case they would go up in relation to risk of lending to us.

[Wayne]

Cool thanks for that. I guess my question could be further explained/asked as follows:

I know that the general trend is for our rates to increase as the Fed increases theirs, so I guess I was wondering the comparison between NZ rates reaction before the election (we knew they'd increase with the Fed) to now with NZ having a weaker economy (i.e. do NZ rates increase with the Fed at a higher or lower degree- or is the health of the NZ economy/$ not a factor in how severe the NZ interest rate will change when the Fed increases)?

Did something happen to the economy? I wasn't aware that it had weakened.
The exchange rate dropped but it did a while back also - did the interest rates change then?

[Bluekiwi]

Did something happen to the economy? I wasn't aware that it had weakened.
The exchange rate dropped but it did a while back also - did the interest rates change then?

It weakened when the Axis of Evil took over

But seriously, yes their has been a number of softer factors come into play if you listen to Tony A and The Count (Westpac the Dom)

[deechnz]

Longer term money is borrowed by the banks at international rates so doesn't matter what happens here in NZ.

Unless things went really bad here, in case they would go up in relation to risk of lending to us.

Awesome, that's answered my queries well. Thanks.

[Perry]

21 Nov 2016

Interest rates are going up very fast.

How's that prediction looking 12 months on?

Don't look, Eri.

[Judge]

You keep asking the same questions Perry and you will get the same answer it was not a prediction. It was a statement of fact which was correct the time. The rates did go up.
I gave up making predictions a long time ago which is why I fix my loans long term when the rate seems right.

[Perry]

The implication was that the rates were going up. And fast. Not that they would go up quickly for a short period of time and stop.

However, You're let off on the basis that you assert it was not a prediction, even though it sounded like one.

[Bluekiwi]

The implication was that the rates were going up. And fast. Not that they would go up quickly for a short period of time and stop.

However, You're let off on the basis that you assert it was not a prediction, even though it sounded like one.

Yep I think you caught him out fair and square Perry

[Judge]

Phew. That was close... Thanks for letting me off Perry.

Bluekiwi, $5 to remove your post?

[Perry]

It's all in lighter vein, really. We all know that predictions are fraught. It's amusing to review them much later, to see how far wrong they were.

Of course, the original soothsayers being pointed out were not members of the PT Forums. But some forumites simply could not escape the occasional mention in despatches.

[Judge]

indeed. And though I said I do not make predictions, deep inside I do make a call on where I think rates are going. Otherwise it's impossible to plan if you accept that everything can change from one day to another (which I know it can). Currently I predict (there I said it) that this time next year the rates will be lower. Any reason? Not really. Just a gut feel. But I will put $20 on it. Any takers?

[eri]

seems a bit backward looking

we make the best decisions we can

with the limited information we have

information that we learn later

is largely irrelevant to that process

certainly some people get it more wrong than right

and we are right to judge their predictions knowing that

but no one gets it right all the time

so why focus on the guesses that were incorrect?

when the value is in the guesses that proved right!

[Bob Kane]

Currently I predict (there I said it) that this time next year the rates will be lower. Any reason? Not really. Just a gut feel. But I will put $20 on it. Any takers?

Not me.
I've been predicting that the days of 8+% interest rates are over and probably won't return.

[Davo36]

Not me.
I've been predicting that the days of 8+% interest rates are over and probably won't return.

Mark this one down Perry.

But Bob, you leave yourself an out, with the word 'probably' right?

[Judge]

Not me.
I've been predicting that the days of 8+% interest rates are over and probably won't return.

Yes, i had a thread here (it did not take off) wondering whether the drop in interest rates was cyclical or structural. If its cyclical, then logically we should be expecting to get back to 7-9% interest rates at some point in the near future. But if its structural (i.e. we have low rates not because this is where we are in the cycle, but rather because the rules of the game have changed) then it is possible we will not get back to the historic cyclical highs ever. 4-5% interest rates may be the new norm. Reasons for structural change cited by those in the know are numerous and i do not know if they are right or wrong. But if the rules of the game have really changed and 4-5% is the new high of the cycle, then we are in a very different property game than before in my view.