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Good advice Sunday

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  • Good advice Sunday

    Today is Good advice Sunday, in fact every Sunday is good advice Sunday. If you want some good advice, you can get it in the NZ herald Business section from good advisers Bernard and Martin.

    Bernard today talks about why you shouldn’t break your mortgage to take advantage of low rates as the break cost could increase the cost of your mortgage over time.
    Bernard advises that his examples in the article assume that interest rates wont rise over the next 20 years
    I guess Bernard’s advice 9 months ago could have been to fix for 5 years and assume that interest rates wouldn’t fall.
    Bernard is essentially advising to implement a mortgage payment strategy where you assume that interest rates wont rise over the next 20 years.
    Is this good advice?

    Martin today talks about his view that property prices will keep falling
    If I was a first homebuyer I might think of waiting before I buy but unfortunately Martin hasn’t mentioned that the more house prices drop, the higher the bank deposits become and therefore the house becomes more unaffordable.
    Martin appears mainly directing his views toward investors and talks about the need to find a higher return in property than you can in government bonds
    “How does this yield of 3.95 per cent compare with other investments? It is not as good as government-guaranteed deposits (the safest investment) and is way below the yield from shares. So, why would an investor buy a house when its yield is so poor?”
    Martin seems to have the opinion that the median house type (where his 3.95% comes from) is targeted for sale to investors which would mean that he believes that investors are the median house purchaser in New Zealand.
    Martin seems unaware that investors are purchasing 7-8% return properties with ease in today’s market.
    Martin is suggesting the purchase of bonds or shares over poor returning property but makes no mention of good returning property.
    Is this good advice?
    Last edited by dandan; 01-03-2009, 06:36 PM.

  • #2
    Dandan. I wa thinking the very same thing this morning when I read the articles.

    Very strange advice that I would've expected Mary Holm to deliver...


    • #3
      Ditto. Old story be careful what you believe for it will come to pass,for you.