Interest Rates

[JBM]

Whereabouts is your commercial JBW?

Southland small rural township surrounded by some of the best farming land in the world

[McDuck]

True, the old chicken or the egg scenario, but a steady pay check will do funny things to your confidence of leaving the teet!

Egg.

The answer to your question is egg.

The egg came first, as proven by fossilized dinosaur eggs.

[Perry]

Interesting to see ASB increasing deposit rates. Maybe they know something?

[chook]

Interest rate trap happening right now , lots have already missed the boat, banks are cunning how they implement it, seen it many times.

[donna]

Though interest rates not forecasted to move upwards for many months i.e. May 2022 and OCR up 25 basis points and as much as 150 basis points by 2024 (but that's quite far out).

Am I missing something chook?

cheers,

Donna

[chook]

Don't listen to the pointy heads on MSM, they tell fabricated lies to the sheeple.

Floating rate is between 4 - 5% currently this should ring alarm bells immediately!, but the main trap is they are holding the 1 year rate low while behind the scenes the longer term rates are going up. 5 year fixed rate in late March was 2.99% (westpac) now it is 4.29%, so a rise of 1.3% in under 3 months....do you get the drift of what they are up to yet?? This is nothing new its an old bank trick in this part of the cycle.
The banksters are enticing people to lock in the low 1 year rate, while behind the scenes the longer fixed term rates are rising. At some stage the 1 year rate will start to rise this will happen sooner rather than later and the masses will start to look at locking in longer term due to the low rate climate, it is at this point its TOO LATE, the longer term rates have already shot up so only option is to bite the bullet and lock in longer at 4-5%, floating at 4-5% or 1-2 years (which are on the rise) so most go, Ok lock in the cheaper short term rate but what will that be after a year?
Inflation worldwide is increasing at a fast rate, only way to control it is increasing interest rates.

[Jeffa]

The government bond yields are tracking down.. have been since Late March.

I was in the inflation camp but I'm seeing market munipulating by central banks, government's and corporation's to keep inflation down or flat.

Hundreds of billions mysteriously appearing in the overnight repo market.

RBNZ has stated they may (will) buy bonds or print money past 2022.

The likes of China is capping certain commodities within it's country to keep inflation down

NZ government and RBNZ promoting 0.8 house price growth to keep house prices down (good luck with that)

Let's not forget the NZ government borrowed billions to pay for welfare and who knows what so it's in there best interest to keep interest rates flat longer term..they are the single biggest debt holder.

If all that money printing went into realestate and shares, there's a good chance it's staying there and not coming out into the real economy

You will still be able to pick up mortgage rates in 2023 in the 2% range, but if you want to get played fix longer in the 3%.

[donna]

I’m keen to know what to do as I have a loan coming off 2 yr fixed and my thoughts are to get whatever is the lowest rate so that is 1 yr fixed am I doing the right thing? I don’t want to end up with 4% or more in a year.

cheers
Donna

[Frezzinghot]

I have all my lending coming off in September, including the home, I used to go for the safety of long term, but with what has happened and the manipulation of the dollar I’m thinking the other way, how can they even think about raising them? The banks want lenders to go longer and are manipulating them to do so by threats of rising rates, tricky tricky.

[Keys]

Having protected my interests by going long term in the past I can categorically say that it was the wrong decision each and every time. I will stick with the one year fixed rate until my loans are paid off.

[Hound]

I've been taking "the lowest rates" for over a dozen years now. Originally they were for six months, then the banks went and set them for twelve months. I successfully rode these rates all the way down. My feeling now hasn't changed, so still go for the best rate. Beat the banks at their "alleged" game. There is a lot of politics here, bank economists issuing fearful predictions to the media, that rates are going to go up. But what's really happening is lip service. The banks don't want to appear offside with the Govt housing agenda, while at the same time discreetly dropping the one year rates. Which is a large part of their business.

There isn't any international wide "bankster conspiracy" Folk will often say that when they've personally made the wrong calls. In reality, and in the main, banks compete with each other. You see this everyday with matching rates. Setting some "trap" isn't going to help their businesses continue to grow, as their shareholders demand.

[Wayne]

I’m keen to know what to do as I have a loan coming off 2 yr fixed and my thoughts are to get whatever is the lowest rate so that is 1 yr fixed am I doing the right thing? I don’t want to end up with 4% or more in a year.

cheers
Donna

If it helps Tony Alexander doesn't think interest rates are going to have a rampant rise but they may be 1% higher in a year. He goes on to suggest the well-worn strategy to manage the risk by laddering fixed rates rather than do all at 1 year.

[donna]

It's good to get varying opinions. I'm going for the 1yr fixed for this loan. I too have been burned with fixing for too long.

Found this on stuff - still a lot of loans on floating even with the high-interest rate....

cheers,

Donna

[Bluekiwi]

I was been pondering the 1 year at 2.25% and 5 year at 2.99% (3.35%) dilema a few weeks ago and did this - in relations to quite a few million dollars.

Trading and development funds I left at short term 2.25% for flexibility reasons (using things like total money and floating / RC options).

Funding for rental properties I fixed some at 2.99 and some at 3.35 because I made a mistake. (I didnt break early as I didnt realise break cost was zero for that loan)

Now the reason for that long term fix is the interesting point.
And the reason is also why I took a hit on breaking some of the loans and taking an interest cost hit - now.

Break fee's are currently 100% tax deductible up till 1/10/21.
And Labours socialist communist law prevending lawful abiding citizens from legally decuting the normal costs of finance for the business of rental properties, will start coming into play.

I do think with inflation looking to finally burst loose, that is what all the economicsts are saying.
We will be looking at high inflation and very high 1 year rates in 2023 / 24 / 25.

Those latter years you wont be able to deduct the cost of interest on rental investment.
So I want lower finance costs then, so am prepared to take a hit over the next 1 to 2 years, and miss out on the eye candy of the short term fix's, as I can deduct the cost by 75% to 100%.

2024 and 2025 if you have high short term rates, and you cant deduct interest cost as an expense, its gonna hurt.

[Wayne]

I was been pondering the 1 year at 2.25% and 5 year at 2.99% (3.35%) dilema a few weeks ago and did this - in relations to quite a few million dollars.

Trading and development funds I left at short term 2.25% for flexibility reasons (using things like total money and floating / RC options).

Funding for rental properties I fixed some at 2.99 and some at 3.35 because I made a mistake. (I didnt break early as I didnt realise break cost was zero for that loan)

Now the reason for that long term fix is the interesting point.
And the reason is also why I took a hit on breaking some of the loans and taking an interest cost hit - now.

Break fee's are currently 100% tax deductible up till 1/10/21.
And Labours socialist communist law prevending lawful abiding citizens from legally decuting the normal costs of finance for the business of rental properties, will start coming into play.

I do think with inflation looking to finally burst loose, that is what all the economicsts are saying.
We will be looking at high inflation and very high 1 year rates in 2023 / 24 / 25.

Those latter years you wont be able to deduct the cost of interest on rental investment.
So I want lower finance costs then, so am prepared to take a hit over the next 1 to 2 years, and miss out on the eye candy of the short term fix's, as I can deduct the cost by 75% to 100%.

2024 and 2025 if you have high short term rates, and you cant deduct interest cost as an expense, its gonna hurt.

A reasonable response for how you see things.
An alternative option would have been to split the periods - some at 2,3 and 5 yr.