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  • ASB and Bank Direct have increased rates.
    1yr 6.55%
    2yr 7.55%
    3yr 8.10%
    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

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    • Market sees 75 point rate hike by June

      http://www.stuff.co.nz/business/3236...e-hike-by-June
      have you defeated them?
      your demons

      Comment


      • Hmmm, well yesterday the economists were all predicting a rise in inflation, reality decline. and this on information they can check on a weekly basis. Too lazy to do the work easier to speculate from a computer screen.

        Comment


        • You remind me of the BERL economists who early last year predicted unemployment would shoot to >11%.

          I am always impressed by how the same guys look straight into the TV cameras and change their predictions without so much as acknowledging their previous estimates. OSCARS or Golden Globes anyone??
          Last edited by Perry; 20-01-2010, 09:32 PM.
          Success is An Attitude!!

          Comment


          • The following are verbatim quotes (emphasis added, of course) from the last paragraph of the last four OCR announcments dating back to July 2009.

            Note the change in language in the red and black portions around the movement of the interest rate and the timing of any alterations to the interest rate.


            RBNZ - 30 July 2009 - “We consider it appropriate to continue to provide substantial monetary policy stimulus to the economy. The OCR could still move modestly lower over the coming quarters. We continue to expect to keep the OCR at or below the current level through until the latter part of 2010.”

            10 September 2009 - “As we have said previously, the forecast recovery in economic activity is based on monetary policy continuing to provide substantial support to the economy. We expect such support will be needed for some time. As a result, we continue to expect to keep the OCR at or below the current level through until the latter part of 2010.”

            29 October 2009 - “In contrast to current market pricing, we see no urgency to begin withdrawing monetary policy stimulus, and we expect to keep the OCR at the current level until the second half of 2010.”

            10 December 2009 - “If the economy continues to recover, conditions may support beginning to remove monetary stimulus around the middle of 2010. Recent tightening in financial conditions, driven by a higher exchange rate, increased long-term interest rates and a wider gap between the OCR and bank funding costs, reduces the need for more immediate action.”

            Imo today's cpi announcement doesn't change much in terms of what the RBA has been saying of late*, but the the next OCR statement is due on 28 January so time will tell.

            *It seems highly unlikely the OCR will go lower, and "around the middle of 2010" could be anytime from Aprilish to Augustish.

            Next CPI annoucement (march qtr) due on 20 April. OCR announcement slated for 29 April.
            Last edited by Mark_B; 20-01-2010, 09:45 PM.
            Comments may not be relevant to individual circumstances. Before making any investment, financial or taxation decision you should consult a professional adviser.

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            • Always remember that Economists have predicted 25 of the last two recessions

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              • with nz dep rates looking to stay low

                and the gov. looking to introduce ways to make investment prop. less attractive

                some nz depositors may pull their cash out and send it to oz where some banks are now offering 8% for 5 years

                that would mean more money has to be raised off-shore

                which would put more pressure on nz interest rates to rise
                have you defeated them?
                your demons

                Comment


                • I am not sure that this is correct eri.
                  Bollards latest Monetary Tool currently requires banks to source 65% of their long term lending onshore. He can increase and decrease this as he sees fit and it limits the bank's ability to source "cheap" funds offshore to lend into the NZ market as they have done in the past.
                  This is a far more effective tool than the OCR and has been applauded and taken on by other governments.
                  It also means that deposit rates are likely to rise as banks compete for the depositor dollars.
                  The other spin off may also be that finance companies will find it more difficult to source funds as they have to compete with the "safer" banks who may be offering acceptable rates with a far lower risk profile, especially as the Govt guarantee scheme is phased out.

                  Comment


                  • Originally posted by hedonist View Post
                    ...especially as the Govt guarantee scheme is phased out.
                    If it is phased out.

                    Going into this recession there were only two OECD nations who had no depositor protection scheme in place (of some sort) - Australia and NZ.

                    Australia was able to put a scheme in place very quickly because they'd been seriously considering the idea for several years (at least as far back as 2003). I don't know the history of the NZ Government's past thinking on the matter.

                    Even with the (generally accepted) world's best prudential regulation that exists in Australia and NZ, it seems unlikely to me that either the NZ or Australian Government would once again want to be on the outer internationally with regards to depositor protection.

                    My prediction therefore isn't that it will be phased out - well not completely - but that they'll look to restrict it to the better regulated institutions and reduce it from the current $1m to a lower level (whatever that may be).
                    Comments may not be relevant to individual circumstances. Before making any investment, financial or taxation decision you should consult a professional adviser.

                    Comment


                    • 8% is a good return from a sound bank in a strong economy

                      probable better than most nz real estate investors are getting currently with all the work, stress and risk of property investment

                      something to think about
                      have you defeated them?
                      your demons

                      Comment


                      • My prediction therefore isn't that it will be phased out - well not completely - but that they'll look to restrict it to the better regulated institutions and reduce it from the current $1m to a lower level (whatever that may be).
                        I tend to agree. The govt has already made it very clear that they are removing the cover for finance companies as some of those that obtained the cover in the first place were not suitable for this sort of protection and were benefiting in a manner not intended from it.
                        My understanding of the govt releases to date is that they will limit the guarantee to banks and similar institutions only.
                        Last edited by Perry; 21-01-2010, 05:15 PM.

                        Comment


                        • In response to Eri and the 8% in Australia:

                          As of this moment, a 38% tax payer who also pays 6% on their non-tax deductible PPOR mortgage earns the equivalent of 9.68% pre-tax on every extra dollar put into that mortgage.

                          Sometimes the best investments are the simplest ones.
                          Comments may not be relevant to individual circumstances. Before making any investment, financial or taxation decision you should consult a professional adviser.

                          Comment


                          • mmmmm
                            Think about the mortgage rate charged if the banks are giving 8% on deposit, given Bollards latest "tool"

                            Comment


                            • Originally posted by Mark_B View Post
                              In response to Eri and the 8% in Australia:

                              As of this moment, a 38% tax payer who also pays 6% on their non-tax deductible PPOR mortgage earns the equivalent of 9.68% pre-tax on every extra dollar put into that mortgage.

                              Sometimes the best investments are the simplest ones.
                              And when the top tax rate drops to 30%?

                              Comment


                              • Well, if the interest rate on a mortgage stays at 6% then it becomes a 8.57% pre-tax equivalent return.

                                If the tax rate drops to 30% and mortgage interest rates rise to 8% the return increases to 11.43%.
                                Last edited by Perry; 21-01-2010, 05:15 PM.
                                Comments may not be relevant to individual circumstances. Before making any investment, financial or taxation decision you should consult a professional adviser.

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