Interest Rates

[Perry]

Probably a bit context sensitive. Lots of good ideas around which are well worth sharing.

But avoiding predicting interest rates and "the future economic situation," seems prudent.

[Wayne]

Probably a bit context sensitive. Lots of good ideas around which are well worth sharing.

But avoiding predicting interest rates and "the future economic situation," seems prudent.

Saying "the interest rate in 2021 WILL BE xxx" is different to "I think rates will trend down and be closer to 3% than 4% in 2021 because xxx".
Both predictions that you can pull up later.

[Eugenia]

Has anyone any experience with China Construction Bank (New Zealand)?
They have competitive rates.

Thank you

[Bluekiwi]

Looks like a OCR drop of .25 to .5 coming either 25/3 or before it.
US and Ausi have moved, so I expect us to do that same.

What do people predict this will do to 1 and 2 year and 5 year rates, if anything ?

[Wayne]

Looks like a OCR drop of .25 to .5 coming either 25/3 or before it.
US and Ausi have moved, so I expect us to do that same.

What do people predict this will do to 1 and 2 year and 5 year rates, if anything ?

Doubt an OCR drop will change the longer rates but other 'events' in the market may do at some stage as the world growth slows.

[Psilan]

Just received a letter from BNZ saying they are removing all 'work perks' benefits (non BNZ employee schemes).
This means no discounted mortgage rates as part of this change.

To be implemented 1st of April.

I guess because rates will be too low by them?

[Perry]

April Fools Day, eh?

[Learning]

Just received a letter from BNZ saying they are removing all 'work perks' benefits (non BNZ employee schemes).
This means no discounted mortgage rates as part of this change.

They never replaced the Premium customer voucher and discounts packs that were discontinued a couple years ago either. They said to "keep an eye out for something special" to replace it. With all these cuts they'll be treating us like commoners soon. :-p

[Bluekiwi]

OKAY SO LETS CUT TO THE CHASE

OCR cut by .75% and floating rates all cut by that on same day, obviously RB had warned the banks.

Now as of this morning, there is no bank movement on 6 month to 18 month rates, those directly related to short term OCR borrowing.

Most banks were around that 3.35% as the lowest short term rate, either in the 1 year or 18 month or even 2 year bracket.

When and what are we going to see from the banks in this bracket now, after the .75% drop, will they pass it on.

Will we see a 1 year rate at 2.6% ?????????????????????????

[PC]

Floating rates should be 2.75%. Not the current 4.45%.
The foreign banks are absolutely creaming it. The margins have never been so good.

[Wayne]

Now as of this morning, there is no bank movement on 6 month to 18 month rates, those directly related to short term OCR borrowing.

Why are 6mth and 1yr rates directly related to the OCR?
The OCR is a day by day thing ie floating.
Banks, after the GFC, were told to keep their borrowings and lending periods in touch with one another. Many banks got caught out with short borrowing and long lending (not so much in NZ) so the rates longer than floating are more related to the bond spread. Has that changed?

[Keys]

Last year, at this time, banks were ramping up their 1 and 2 year rates. Just started to do that again I see. This was an interest rate blip in the market and did not sustain itself for very long. Many pundits are picking rates to be in the 2's. I have one coming off in May. It will be a decision then, do I go for 6 or 12 months. The jury is still out on that.

[Bluekiwi]

Why are 6mth and 1yr rates directly related to the OCR?
The OCR is a day by day thing ie floating.
Banks, after the GFC, were told to keep their borrowings and lending periods in touch with one another. Many banks got caught out with short borrowing and long lending (not so much in NZ) so the rates longer than floating are more related to the bond spread. Has that changed?

I admit I don't know all the ins and outs of this, and you are possibly correct.
But that's not how the Banks work in spirit, or how the public expects them to work.

ANZ 1 year rate just announced 3.05% for 1 Year.
If BNZ do that also, then I am taking some of that action.

[Don't believe the Hype]

I admit I don't know all the ins and outs of this, and you are possibly correct.
But that's not how the Banks work in spirit, or how the public expects them to work.

ANZ 1 year rate just announced 3.05% for 1 Year.
If BNZ do that also, then I am taking some of that action.

Me too - closing out our RC's and fixing the 1 yr rate. In the GFC banks called in a lot of RC's as they're easy to close. Locking in and keeping the cash under my mattress.

Noted they only cut the previous rate by 0.65pts - likely to not want to break under 3%

[Bluekiwi]

Well I decided not to wait any further, and the reason is this.
If things get bad, rates go down, if they get really bad, they go lower for longer...…….
If things turn to shit, rates go nuts skywards as no one feels safe to lend money to anyone, GFC as an example.

So I bit the bullet and fixed 1.7m today from May, at 3.05% for 18 months.
Maybe before 7/5 the rate could drop lower, as we are in a quick moving fast vicious downward spiral.

But dropping my annual interest bill by $36,000 makes me feel safe in these uncertain times.
That's a $700 bucks a week improvement in cash flow, locked in for 18 months.

That's a good amount of time to be safe, and a specific amount of time to me that I know for certainty, the world economies are still going to be ****ed.
I am comfortable that in September 2021 (early rate lock in affect) the economy will still be in recovery mode and rates low.