Go long, go short or float?

[donna]

Many kiwi homeowners face tough questions regarding their home loans this year.

4 out of 5 who have come off a fixed rate have either gone short or left it floating until RBNZ makes its next rate drop and their lenders do likewise.

What's interesting - Kiwi homeowners play the mortgage market much like Americans and Asians play the share market.

But Isemonger said more borrowers were taking the risks.

"There's a lot pointing towards the interest rate coming down, so people are taking that gamble. And it is a gamble because you really just don't know what's going to happen, and the biggest consideration really is that your repayments could go up."

What are our PTers doing? I like 6mths max at the mo.

regards,

Donna

[Jeffa]

Only concern is the more the RBNZ. Cuts the weaker (or more worthless) our kiwi dollar becomes, Adrian Orr likely to bring this up in next month’s meeting and OCR decision

Higher inflation in the US will keep the NZ dollar weak so Orr may need too tone it down on the rate cuts later this year

Best case scenario is inflation falls in the US later this year, perhaps Trump becomes more of a protectionist and forces the Fed to cut rates weakening the USD helping out US companies, and a weaker USD means a Stronger NZD and this helps the RBNZ get those rates lower later this year

At this stage I wouldn’t hold my breath, if 4.99 to 5.20 becomes available in the next few months, fix and forget about it for a few years, then go for a holiday on the GC.

[Sanya]

Only concern is the more the RBNZ. Cuts the weaker (or more worthless) our kiwi dollar becomes, Adrian Orr likely to bring this up in next month’s meeting and OCR decision

Higher inflation in the US will keep the NZ dollar weak so Orr may need too tone it down on the rate cuts later this year [...]

I think Orr will have to tone down rate cuts. As you point out more rate cuts will further weaken the kiwi dollar. This in turn makes our balance of trade even worse with cost of imports, especially refined petroleum, increasing. Rising petrol / energy costs in turn will in turn feed increase inflation.

What are our PTers doing? I like 6mths max at the mo.

If sub 5% rates hit the mortgage market i'd be tempted to lock them for a longer term.

[Frezzinghot]

I think Orr will have to tone down rate cuts. As you point out more rate cuts will further weaken the kiwi dollar. This in turn makes our balance of trade even worse with cost of imports, especially refined petroleum, increasing. Rising petrol / energy costs in turn will in turn feed increase inflation.





If sub 5% rates hit the mortgage market i'd be tempted to lock them for a longer term.

It’s a fine line, I have 2mil coming of fixed in the next 2 months and still toying with another 6 month tint. Questionable times indeed.

[JBM]

Yes I'm with Westpac and one of my loans has just come off. The best they have at present is 5.49% 2yr fixed ... I see BNZ has dropped 2yr to 5.29% if WP can match that I'll be taking it ..I'm looking at 2yr at that's when the lease comes up for ROR on the property..

I agree I don't see many more cuts to come from the RBNZ they are in a rock and a hard place .. NZD is weak ..great for exporters, but just look at our trade balance ... along with Business CAPEX hurts new businesses and re-builds etc and can see many NZ business offshore

[donna]

^^ ditto - and I'll do the same. Westpac did suggest I wait to see what they may do after the RBNZ announcement - so fingers crossed it's a good one.

[Frezzinghot]

This all seems like a game of chess. I feel our economy is in the crapper, therefore it needs an injection of cash, at current interest rate levels I just can’t see how they will get it going again, as KJ said, they should have started cutting end of 2023. I’ve heard from a friend who owns a construction company that many residential spec companies are surviving on crumb. Another year of this will be disastrous. I’m picking further drops so and treading very careful on how long I fix for.

all my loans come off in March and I’m not fixing longer than 1 yr, the printing machines will have to go into overdrive to get us out of this mess!

[JBM]

^^ ditto - and I'll do the same. Westpac did suggest I wait to see what they may do after the RBNZ announcement - so fingers crossed it's a good one.

been talking with Westpac Business banking and have secured 5.29% for 2yrs so going with that.. I'd say like BNZ first mover all the banks will move to these lower 5's levels .. could we see lower sub 5% this year ..maybe but also think inflation could pick up under trump ..just look at the bond issues around the world ..there is no shortage of debt looking for a creditor to take on ... I'm happy to be locked in and can forget about it for the next couple years and on my other load another 3yrs+ to go

[JBM]

This all seems like a game of chess. I feel our economy is in the crapper, therefore it needs an injection of cash, at current interest rate levels I just can’t see how they will get it going again, as KJ said, they should have started cutting end of 2023. I’ve heard from a friend who owns a construction company that many residential spec companies are surviving on crumb. Another year of this will be disastrous. I’m picking further drops so and treading very careful on how long I fix for.

all my loans come off in March and I’m not fixing longer than 1 yr, the printing machines will have to go into overdrive to get us out of this mess!

Go look at many third world nations they don't have low rates ..if NZ credit is going down wards as business risks and default is higher then Bonds holders will demand higher rates to cover risks

[Frezzinghot]

Go look at many third world nations they don't have low rates ..if NZ credit is going down wards as business risks and default is higher then Bonds holders will demand higher rates to cover risks

Australia has lower cost housing and lower interest rates, higher wages, they are not a good comparison but geez we get robbed here.

[JBM]

Australia has lower cost housing and lower interest rates, higher wages, they are not a good comparison but geez we get robbed here.

Depends where in Aus ... mates in Sunny reckon near on impossible to secure decent rental .., and housing prices are not exactly cheap ..but yes overall Aus higher wages lower basic cost to NZ ... funny to see a clip on an Aussie res that moved to the USA ,was blown away how much cheaper in living costs than Aus..but yet again, it depends on where

[Frezzinghot]

Depends where in Aus ... mates in Sunny reckon near on impossible to secure decent rental .., and housing prices are not exactly cheap ..but yes overall Aus higher wages lower basic cost to NZ ... funny to see a clip on an Aussie res that moved to the USA ,was blown away how much cheaper in living costs than Aus..but yet again, it depends on where

I have a lot of family in Aus, when they left, they never came back. It tells you something. I think there are many pros/cons for moving there, I just think being so small we suffer from just about everything cost related. The property market may have come back 20% but it still doesn’t make it affordable. It doesn’t bother me as much but more so my children!

[donna]

Just red Westpac 4.99% 3 years - available from Friday.

[Frezzinghot]

Just red Westpac 4.99% 3 years - available from Friday.

So what are you thinking Donna? I have 2m coming off in the next 2 months.

[donna]

I’m locked in with Westpac for 3 years so I’ll probably take it.

You may do better than that in a couple of months