NZ mortgage rates: How we compare with rest of the world

[muppet]

NZ mortgage rates: How we compare with rest of the world

5:00 AM Saturday Oct 18, 2014

• Interest Rates
• Mortgages
• National

File photo / Janna Dixon
New Zealanders are paying some of the highest interest rates in the OECD, our house buyers saddled with the punitive prices due to the regime attempting to stop runaway inflation.
Christina Leung, ASB economist, said that on an international scale our rates were towards the top.
"New Zealand's mortgage rates are some of the highest of the developed countries, but in sharp contrast to developing countries such as India and Philippines which have double-digit mortgage rates. Part of this does reflect our relatively high central bank policy rate with the Reserve Bank being the first central bank out of the developed economies to start the tightening cycle," she said.
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A chart from the Organisation for Economic Co-operation and Development showed New Zealand rates at 4.2 per cent, behind Mexico and Iceland but paying almost twice as much as the Americans' 2.42 per cent.

More in the Granny at

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11344401

[muppet]

A very interesting paragraph from the above article.

"In economies where the interest rates are higher,
you will also find that capital appreciation tends to be higher.
Therefore the people who are paying the high interest rates are
also bearing the fruit of their property appreciating more than in most of the OECD."

So is this why we have such high prices for property in New Zealand?

[DaveW]

A very interesting paragraph from the above article.

So is this why we have such high prices for property in New Zealand?

I think its simply a case of supply and demand.

[drelly]

A very interesting paragraph from the above article.

"In economies where the interest rates are higher,
you will also find that capital appreciation tends to be higher.
Therefore the people who are paying the high interest rates are
also bearing the fruit of their property appreciating more than in most of the OECD."

So is this why we have such high prices for property in New Zealand?

Uhhhh... that quote's kind of obvious isn't it? Higher interest rates, greater appreciation... it ignores real returns though. IMHO, prices are (relatively) high here due to increases building requirements, difficulty of development and lack of competition.