Interest Rates

[Perry]

I suspect most such edicts are ambiguous in the sense that the opinion is a prediction and vice versa.

Anyway, it's not a big deal. It's amusing to re-visit these things to see if or to what extent they have materialised.

Off to check the Black Friday thread, now.

[Bluekiwi]

My opinion is that my predictions will be correct.

[Davo36]

My prediction is that my opinions will be correct

Oh and Bobsyouruncle will go bankrupt again.

[Wayne]

It's getting tougher!
Just had BNZ reply to a rate request with
"I have been advised that due to the changes in regard to rates we can
offer for Investor only customers, we are unable to offer any further
discount on the classic rates."

So their standard rate is it if you don't have your home in there as well.
Anyone know if this is typical now - or across other banks as well?

[Wellington Broker]

Standard BNZ policy is actually that Classic rates are not available to investors without their home with BNZ....

[brokerman]

Standard BNZ policy is actually that Classic rates are not available to investors without their home with BNZ....

Yep and they now won't lend on apartments under 65 sm.

[Bluekiwi]

The NZ divisions of the Ausie banks have been given the finger.
These Ausie banks have all had their funding cut and just what you expect from Ausies, they are telling the NZ subsidiaries "Get lost ausie comes first matey"
Go get your own funds from NZ depositors.

Forget the rules, they are just looking for any excuse not to lend out money.
Less lending, they still need to make money, margins and interest rates will rise.

And then the NZ banks spout out this media spin about the gap between deposits and lending in NZ is so big now.
We have to take that into account.
Its BS, as nothing has changed materially in that regard.

Banks have no requirement to do business fairly with its customers, they only have a duty to their shareholders and owners to make money.

[Perry]

These Aussie banks have all had their funding cut.

What happened to cause that?

[Bluekiwi]

Sorry I thought everyone knew about that ?

Its a long story, but revolves around apartment market collapse's in a couple of cities.
Developers owing lots of money to those banks as apartments didn't sell.
The Zurich gnome underwriters of those banks pulling some plugs.

[Don't believe the Hype]

It's getting tougher!
Just had BNZ reply to a rate request with
"I have been advised that due to the changes in regard to rates we can
offer for Investor only customers, we are unable to offer any further
discount on the classic rates."
So their standard rate is it if you don't have your home in there as well.
Anyone know if this is typical now - or across other banks as well?

This is not what we've found with BNZ and we're working to secure more funding ATM. We don't have our home with any bank we own it outright and still get discounted rates.

[Wellington Broker]

This is not what we've found with BNZ and we're working to secure more funding ATM. We don't have our home with any bank we own it outright and still get discounted rates.

Which channel is this through? Partners?

[Don't believe the Hype]

Which channel is this through? Partners?

Yes, partners

[exnzpat]

Real estate will always be a gamble in New Zealand, unless something changes.

Here’s the problem: your mortgage is based (around or thereabouts) on a 25-year time period – this is acceptable; however, the banks force a short-term payment plan on the borrower i.e. 2-year float, 3 or 5-year fix, or some variation of the same. What this means, is the banks will always win and the borrower will always lose. You, the borrower, must renegotiate your loan at whatever the newer interest rate is – lower or higher as the case may be, every two or three or five years.

This is what you all know and accept without question.

But it doesn’t have to be this way.

Right now, interest rates are relatively stable and low, but one day, someday, interest rates will rise again – and I don’t mean rise a ½ percent or even 1 percent – I mean serious change. It’s inevitable, it really is.

Imagine, if you can, renegotiating your 2-year floating rate at 14 or 15%. Try running an interest rate of 9% through a spreadsheet or mortgage calculator and see what you come up with. I chose 9% because that was the going mortgage rate in 1992, when I bought my first house.

You may scoff. But simply ask your parents and grandparents what interest rates were in the 1980’s, and they’ll tell you how it once was. They’ll tell you how near impossible it once was to own your home. Imagine what it would be like to one day be a home owner and the next day to be a renter, or worse yet, to be homeless because your mortgage is higher than your income.

[exnzpat]

Here is but one solution:

The easiest and fairest way to force competition into the private housing sector is for the government to directly compete against private (Australian) banks.

Imagine, if you will, Kiwi Bank offering a 30-year fixed rate based on today’s interest rate. In other words, your interest rate is set today and will not change, regardless of market forces, over the next 30 years.

Kiwi Bank can do this because it competes against nobody (in actuality), nor does it need to make a profit (in actuality). The fall-out would be immediate. Most New Zealanders will flock to Kiwi Bank to refinance their existing loans with this more desirable, stable, and predictable loan. And immediately, we will see the private banking system compete for customers by following suit.

The government’s sole responsibility is to a stable economy and to offer up economic fairness to the New Zealand people, who, quite frankly, are being ripped-off when it comes to the kind of home mortgages offered today by the private banking sector.

As a people of a nation we have a responsibility to provide a fairness to all. We are the government. We don’t need to make laws or force arbitrary rules on banks that would hurt them, rather, by competing widely and blindly, we would force banks to change their money lending strategy’s. Sometimes they will win and sometimes they will lose. And that's fair.

[Don't believe the Hype]

How happy would the punters be if they locked 30 years back in 2010 at 9% -

The rules of the game are known and people can make their own decisions (and commitments) based on what is know.

In my opinion, issues arise when regulatory bodies try to 'fix' short term or 'populist' issues with rule changes that benefit some but impact all.