Interest Rates

[Bob Kane]

I recall that the economic experts used to say that the OCR needed to be at 6% to have a neutral effect on the economy.
Any lower and inflation would take off.
This meant floating rates were about 7-8%.
These days, an OCR rate of 1% produces no inflation.
And no-one knows why.
While there's no inflation, interest rates will stay below 5%.
It's hard to see what will make inflation return.
Maybe it's gone forever.

[JBM]

I recall that the economic experts used to say that the OCR needed to be at 6% to have a neutral effect on the economy.
Any lower and inflation would take off.
This meant floating rates were about 7-8%.
These days, an OCR rate of 1% produces no inflation.
And no-one knows why.
While there's no inflation, interest rates will stay below 5%.
It's hard to see what will make inflation return.
Maybe it's gone forever.

Maybe it’s different where u live but I have seen plenty of inflation locally living costs on average through the roof .. but they must’ve include those inflation numbers ,,, good old govt love to use bananas .. TVs,Washing machines .... as if just did the numbers on rent ,home prices . Cost of foods per gram , fuel , rates , insurance ,firewood etc ,auto mechanic costs , housing repair & servicing costs, school fees , etc you know actually everyday cost average kiwis spend hundreds to thousands on every week on week .. I can promise you it isn’t 1% pa

In the last two years here in central otago housing has increased on average 25% pa along with new rent 10-20%

I could give doz of examples section just down the road sold 115k mid 2016 —- back on the market sold months ago high 200,s ....

Low rates has caused distortions in asset values housing the worst affected had rates stayed above 6% no way property prices would have spiked so high as investors would still be getting 5.5% etc deposit rates in the bank ...but instead they use cheap leverage and buy more property to get better returns add in foreign investors doing the same and wella we have more buyers than sellers

[Bob Kane]

Maybe it’s different where u live but I have seen plenty of inflation locally living costs on average through the roof .. but they must’ve include those inflation numbers ,,, good old govt love to use bananas .. TVs,Washing machines .... as if just did the numbers on rent ,home prices . Cost of foods per gram , fuel , rates , insurance ,firewood etc ,auto mechanic costs , housing repair & servicing costs, school fees , etc you know actually everyday cost average kiwis spend hundreds to thousands on every week on week .. I can promise you it isn’t 1% pa

That puts you at odds with the Stats Dept.
I prefer the official figures.

[JBM]

Some of those stats --how many landlords only increasing rent 2.1% yoy LOL

From the March 2017 quarter to the March 2018 quarter, the CPI increased 1.1 percent.

Housing and household utilities increased 3.1 percent; construction was up 4.7 percent, and rentals for housing up 2.1 percent.
Alcoholic beverages and tobacco increased 4.5 percent; cigarettes and tobacco was up 11 percent due to an increase in excise duty for tobacco and tobacco products.
Transport decreased 0.2 percent as seasonal international air transport decreased 14 percent. These falls are larger than typically seasonal movements.

[Wayne]

More than happy to eat my words come 2020 if we don't see floating rates 7% or higher ... it's naive to think low rates are the new normal ...

Of course if low inflation is the new norm then there is no reason low interest rates won't be also.
If you look back over a long enough time span you will see that high inflation and high interest rates are the abnormal blib.

[GLin]

Westpac just called, offered 4.09% for 12 months re-fix, on a 170k mortgage investment property.
I'm lazy and took the deal!

[Davo36]

Westpac just called, offered 4.09% for 12 months re-fix, on a 170k mortgage investment property.
I'm lazy and took the deal!

I'm banking with them now. Some of their systems are really antiquated.

Got a business credit card from them. But they can't show it online. Not without me having to register for "Business Banking" which is a whole other system which costs $10 per month. BS.

[GLin]

I'm banking with them now. Some of their systems are really antiquated.

Got a business credit card from them. But they can't show it online. Not without me having to register for "Business Banking" which is a whole other system which costs $10 per month. BS.

My daily banking has been with ASB and always will be. ASB online system is just easy to use and convenient.

[Davo36]

My daily banking has been with ASB and always will be. ASB online system is just easy to use and convenient.

Yeah I'm starting to think I'll do the same thing i.e. have my mortgages with Westpac for the lower rates but do everything else at ASB.

[flyernzl]

According to the latest Consumer bank survey ASB have now sunk to bottom equal with ANZ.

"This year sees ASB slide all the way to equal last. It rated below average for value for money and one in 10 ASB customers were also dissatisfied with its performance as a responsible lender."

[Davo36]

It's funny how ANZ is often at the bottom, but it's them who are growing their mortgage book.

As a percentage they're growing faster than the others.

[PC]

Is it because they pay mortgage brokers better?
ANZ aren't great to deal with - but the brokers always seem keen on them.

[GLin]

Is it because they pay mortgage brokers better?
ANZ aren't great to deal with - but the brokers always seem keen on them.

That's because ANZ generally gives the best interest rate and cashback for new customers.

[JBM]

Yeah I'm starting to think I'll do the same thing i.e. have my mortgages with Westpac for the lower rates but do everything else at ASB.

Exactly how I do it as well >>

[JBM]

That's because ANZ generally gives the best interest rate and cashback for new customers.

Yes ANZ offering me great Cashback and rate to shift but I know like last time when it comes to re-fix date they then don't match the other banks rates offered to think from memory I only got offered advertised rates ...so bye bye ANZ off to WP who seem to give great rates on re-fixing