Interest Rates

[Jeffa]

US nonfarm payrolls increased by 850,000 in June versus the estimate for 706,000...

But..

The US 10 year treasury yield dropped %3.31 overnight !?

The bond markets pricing in deflation.
If the bond market is correct we're moving into deflation over the next few years.

This will take the pressure of the RBNZ to raise the OCR.

[Hound]

US nonfarm payrolls increased by 850,000 in June versus the estimate for 706,000...

But..

The US 10 year treasury yield dropped %3.31 overnight !?

The bond markets pricing in deflation.
If the bond market is correct we're moving into deflation over the next few years.

This will take the pressure of the RBNZ to raise the OCR.

Yes exactly. My view is we are coming off a dead cat bounce. Potential for a low interest rate environment over the next decade. Of course few want to believe that. This includes the Govt, the popular media and bank economists. And, it seems, a majority of property investors.

[Perry]

Why would the majority of PIs not want low interest rates?

[Hound]

Why would the majority of PIs not want low interest rates?

It's more a question of their belief that rates will be going up. Rather than wanting them to go up.

[donna]

Is anyone jumping in for a variable new build loan?

Just wondering what the conditions are - is intention to build enough or have do you need the building consent for a new build to get the loan?

And the low rate is for 2 years so that maybe tight if building supply remains a headache.

cheers

Donna

[JBM]

Ended up locking in 1yr fixed yet again 2.19% on my two loans .. been locking in the lowest rate 1yr for many years now 5+ ...has saved me thousands ... not stressed if we see rates higher this time next year as its not going be anymore than a token amount .25% ... then lock in 2.45-2.5% 1yr 2022/23... I would not be locking in 3.69% 5yr as I don't think we will see 1yr rates higher 2026

No way this massively privately in-debt country can pump rates to highs without really hurting the consumer + deflating NZ growth engine DEBT fuelled property speculation

[Keys]

Locked in two loans at 2.25% in May. Purchased a small commercial and asked if I could put that loan on interest only and put the May loans (residential) onto P+I to get the balance down quickly. Seems that was OK. The May loans were broken with no fee and reduced to 2.19% Not too much you may say but.......... still a saving.

[JBM]

Locked in two loans at 2.25% in May. Purchased a small commercial and asked if I could put that loan on interest only and put the May loans (residential) onto P+I to get the balance down quickly. Seems that was OK. The May loans were broken with no fee and reduced to 2.19% Not too much you may say but.......... still a saving.

Right well found out today both my commercial loan and company loan have to be P&I to secure these low RES rates new rules put down by RBNZ .. even though my RES equity covers both loans 2x fold

...Will be the first time in 15yrs my company loan will be P&I ..as I could pay the loan of anytime I want from company capital but I use the extra capital as I believe I can get a better Cap return than 2-3% I.O paid..

Banker did state he could still give me I.O loan but would have to pay Business loan rate 3.1% 1yr fixed !!!

so I took the 2.19% 1yr will pay thousands off in principal then at the end of the 1yr term I'll be asking for the full amount of the loan again and they can give back my principal I paid over the year

[Frezzinghot]

ASB economists now expect the Reserve Bank to start increasing the official cash rate (OCR) from November. (Stuff)

more threats!

[Jeffa]

ASB economists now expect the Reserve Bank to start increasing the official cash rate (OCR) from November. (Stuff)

more threats!

Yeah it doesn't make sense, according to the bank's and media inflation is only for the bottom 20%

Most kiwi's have been screaming out for a higher wage economy but as soon as there's any sign of inflation they want to stop it in it's tracks.

If the RBNZ has any balls, they need to do what the RBA and the Federal reserve are going to do and let inflation run above 3 or 4% . This with help with wage inflation and push there economies ahead.

If we jump on inflation to soon we're likely to fall even further behind Oz in income earnings.

RBNZ should already know this and understand raising the OCR only benefits the retail bank's and shareholders profit margin..it doesn't mean house prices are going to fall 30%.

[Jeffa]

The biggest driver of deflation this decade is technology.

Most of us carrying a smart phone worth about $1000.

It has the same technology as $25,000,000 super computer from 1991.

If it gets political and we jump the gun and increase interest rates too much too soon we will regret it for the coming decade as technology drive's down prices and automation takes over low skilled workers jobs and income.

Stagflation is much more dangerous than inflation.

[chook]

Inflation (rising prices & interest rates) Deflation (falling prices & values) Stagflation ( rising unemployment and rising inflation)

Pick a card ..any card..

[Perry]

Another one's at it, now.

BNZ joins ASB in predicting OCR will rise in November
6 Jul 2021

ASB and BNZ economists have brought forward the date when they expect the Reserve Bank to start increasing the official cash rate (OCR). Both banks now forecast the first rate rise will come when the central bank issues its final money policy statement for the year in late November.

The OCR is at a record low of 0.25 per cent. The Reserve Bank said in March last year that it would remain on hold for 12 months while the country grappled with the effects of Covid-19. But recovery has happened more quickly and has been stronger than expected, with gross domestic product (GDP) rising 1.6 per cent in the March quarter.

[Frezzinghot]

Another one's at it, now.

BNZ joins ASB in predicting OCR will rise in November
6 Jul 2021

Now watch all the lenders clamour for the long term rate.

[Jeffa]

Yeah it doesn't make sense, according to the bank's and media inflation is only for the bottom 20%

Most kiwi's have been screaming out for a higher wage economy but as soon as there's any sign of inflation they want to stop it in it's tracks.

If the RBNZ has any balls, they need to do what the RBA and the Federal reserve are going to do and let inflation run above 3 or 4% . This with help with wage inflation and push there economies ahead.

If we jump on inflation to soon we're likely to fall even further behind Oz in income earnings.

RBNZ should already know this and understand raising the OCR only benefits the retail bank's and shareholders profit margin..it doesn't mean house prices are going to fall 30%.

The Reserve Bank of Australia kept the cash rate unchanged at a record low of 0.1% during its July meeting, as widely expected. Policymakers also held its yield curve control program at the April 2024 bond maturity of 10 bps; and decided to extend its current bond-buying programme to at least mid-November, but reduce the amount purchased to A$4 billion a week, from the current A$5 billion. The central bank reaffirmed its commitment to achieving full employment and inflation consistent with the target. Policymakers also reiterated that they will not increase the cash rate until actual inflation is sustainably within the 2 to 3% target range. The RBA's scenario for the economy is that this condition will not be met before 2024