OCR just put up 0.5%. April 2022

[McDuck]

Mr Orr just bumped the OCR up a huge 0.5%.

Honestly, I was expecting him to do as little as possible, for as long as possible.

Who's coming off fixed, and how will this change your disposable income.

[donna]

Still got a few months to go - can it go up again by July?

cheers
Donna

[McDuck]

Still got a few months to go - can it go up again by July?

cheers
Donna

Hi D, good question.
Depends on inflation I guess.
The FED in the US are not getting control of it, so .. it's on the cards .

PS , how do I correct the typo in the title from OCT to OCR?

[donna]

Also interesting is ANZ 2 yr rate is 5.25% - so much more than the others. BNZ is 4.69%.

This from Tony Alexander is interesting. Max 3% OCR - but probably won't get there as households struggle with current increases in costs. Plus some property developments likely to be canned due to a lack of buyers!

cheers,

Donna

[donna]

^^ more on that so OCR is 1.5 % and mortgage rates 3 x that so if OCR got to 3% what would the mortgage rates be?

[McDuck]

^^ more on that so OCR is 1.5 % and mortgage rates 3 x that so if OCR got to 3% what would the mortgage rates be?

Us old timers remember interest rates of 18%.

I bought my first house just before the rates skyrocketed.

So for me, all this brings back fond memories.

I had a massive deposit, and a huge income.

I was so busy at work, I didn't even pay attention to the rates.

The gap between outgoings and incomings was so wide, that I had the whole thing paid off in about 12 months.

But it wasn't a good feeling, no one wanted to buy houses at that point.

Dead market.

And it cost money to keep up, and rates and insurance.. etc.

My best friend, who was a real party animal, had done the same thing.

But he had only a 10% deposit and medium income.

He was really in hot water, I offered to bail him out. but he was too proud.

He ended up taking part time night work to cover the shortfall.

Yet a mere 12 months earlier we were in the madness of prosperity.

Wearing our Miami Vice clothes, at a huge party in the stock market building on queen street.

Fancy cars, free champagne , laser lights, smoke generators, and fashion models on a runway - showing off the latest designs.



I still remember looking at my mate, and saying, " Where is all this money coming from?".

He just laughed knowingly, "from all those investors"...he replied.

I just couldn't comprehend a scenario where an investment allowed such waste.

But back in those days I thought grownups were honest, responsible and fair.

[Wayne]

^^ more on that so OCR is 1.5 % and mortgage rates 3 x that so if OCR got to 3% what would the mortgage rates be?

Current rates are 3x - they are OCR +X.
So OCR of 3% wouldn't be rates of 9%.

OCR expected to rise by 0.5% again next time (6 weeks).
1yr rate expected to settle below 6% and longer rates have already risen with the expectation of future rises in OCR so may not rise further.

[chook]

Us old timers remember interest rates of 18%.

I bought my first house just before the rates skyrocketed.

So for me, all this brings back fond memories.

I had a massive deposit, and a huge income.

I was so busy at work, I didn't even pay attention to the rates.

The gap between outgoings and incomings was so wide, that I had the whole thing paid off in about 12 months.

But it wasn't a good feeling, no one wanted to buy houses at that point.

Dead market.

And it cost money to keep up, and rates and insurance.. etc.

My best friend, who was a real party animal, had done the same thing.

But he had only a 10% deposit and medium income.

He was really in hot water, I offered to bail him out. but he was too proud.

He ended up taking part time night work to cover the shortfall.

Yet a mere 12 months earlier we were in the madness of prosperity.

Wearing our Miami Vice clothes, at a huge party in the stock market building on queen street.

Fancy cars, free champagne , laser lights, smoke generators, and fashion models on a runway - showing off the latest designs.



I still remember looking at my mate, and saying, " Where is all this money coming from?".

He just laughed knowingly, "from all those investors"...he replied.

I just couldn't comprehend a scenario where an investment allowed such waste.

But back in those days I thought grownups were honest, responsible and fair.

Great story, I remember those days well too, buying any type of share as they were all going up in 1987, then October came and boom! what happened.

I feel we are in for a similar but different situation. I think in about a years time maybe 18 months they will be dropping interest rates due to everything being so bad, but this time there wont be another property boom cycle as people will have no money we will be in a very bad recession and It will only be a very small select few who will be in a position to be able to scoop up any bargain they want. There is already some crazy shit happening in world markets, we are on the edge.

[JBM]

Yes rates will keep rising to the property market crashes and unemployment skyrockets as so many employed in the property sector just look at how many RE Agents we have these days... then like the rest of the world we will be in a major recession maybe even depression after all the easy money ...capital spurge from Govt ...Councils>>>> consumers ... I know Dunedin will have over a Billion on tick ...at low rates not a major ... but 6-7% maybe higher ... just watch as Rates go through the roof on all these property valued 50-80% higher than last rating...

Its all leading to a perfect storm of hell for the average consumer / worker ... all the basic living expenses inflating higher at a rate of knots >> while job security and employment will be going the other way ..straight off the bat we have 10% of kiwis employed directly in the Property sector ... we have major high paying employers like "Tiwai smelter" - NZ refining-SBA closing at a record amounts ...will be a domino effect next few years


... I fixed two loans last year 1yr fixed term 2.19% ..they come due JULY 22 .. prob see 5%+ 1yr rates by then ..

[Keys]

... I fixed two loans last year 1yr fixed term 2.19% ..they come due JULY 22 .. prob see 5%+ 1yr rates by then ..

Ditto on fixed loans. Will be fixing again for 12 months in June/July after paying off lump sums all of this term.

[donna]

Geez I’m on the same boat re July for expiry of very low fixed rate - but why not fix for longer if it’s obvious rates will continue to go up?

cheers

Donna

[Chris W]

I think in about a years time maybe 18 months they will be dropping interest rates due to everything being so bad

Will the RBNZ drop interest rates if inflation is high?

[donna]

^^ or not - some of us have experienced high rates in the teens so why wouldn’t it happen again?

[Jeffa]

Rates will likely stop increasing in early/mid 2023.
Options market are pricing rates to begin lowering in 2024 then go negative mid decade.

It's a gamble for options trader's pricing in rates to go negative mid decade, but at this point in time currencies are trading very low as of this post because I'm trading at 4am (NZD 66c to USD)

Tony Alexander saying the OCR has been priced in to top out at 3% and any change to that forecast will be down.

Inflation rate at 6.9% was a miss with consensus at 7.4%

If this continues to lower for Q2 CPI inflation rate you will start seeing long term interest rates come down.

Politically this is good and bad for landlords, if inflation comes down to normal in mid 2023, this could work in favour for the current government in election year but unlikely with polls sliding continuously for labour, I'd predict the minor parties will play a major role in who controls the nation's credit card/rent /tax changes etc in 2024.

The polls are likely to front run the housing market for landlords anyway.

[donna]

Hi Jeffa,

We've missed you . Thanks so reading between the lines stick to short term fixed rates or floating - I see Resimac is 3.89% floating.

cheers,

Donna