Interest Rates

[JBM]

As much as we haven't see a lift in rates for a long time now...

if the FED does keep to plan and continue to lift to 2020 target 3% fed fund rate(our OCR rate 1.75%) ...then no reason why we couldn't also see 7%+ floating rates by 2020-21 ...and longer out we could see 8%+ if the international bond market turns from it's 30yr long term BULL Trend

which does worry me around my lending ...one 200k company other 380k commercial property with 10yr fixed term lease ..

Am thinking about a mix of very long term 5-10yr fixed and short term fixed rates 1-2yrs

[eri]

4.2% with anz for 1 yr too

longer terms, higher rates

so while the banks don't necessarily expect rates to go higher

they want to be covered of they do

[JBM]

4.2% with anz for 1 yr too

longer terms, higher rates

so while the banks don't necessarily expect rates to go higher

they want to be covered of they do

Yes, the cost of wholesale funding is trending north and with the vaste bulk of Kiwis going for lowest rates possible(short term & floating) I think the banks don't see the risks longer term as they can always just claw back losses from the small pool of longer term rates by increasing the shorter terms floating ... locking in 6.2% for 10yrs soon could well be a very smart move come 2020's etc I'm certainly thinking about putting at least a third of my borrowing into a long term fixed rate>>>


Anyone deal with TSB ?

[Davo36]

4.2% with anz for 1 yr too

longer terms, higher rates

so while the banks don't necessarily expect rates to go higher

they want to be covered of they do

I'm being charged 4.39% on my property... Asked them to do it for 4.29%, they're saying no... Around 14.5% lvr... so I dunno. ASB.

[Learning]

.. locking in 6.2% for 10yrs soon could well be a very smart move come 2020's etc I'm certainly thinking about putting at least a third of my borrowing into a long term fixed

The biggest problem I see with locking in so long is that it neutralises your negotiating power when the short term rates expire.

Say $400k at 4.2% for two years and $200k at 6.2% for ten. After two years the bank wants to beef up its margin and offers no discount on the $400k to refix. What will you do? Break the $200k with eight years left, the fee will be enormous.

[Davo36]

Guys, when I looked on ASB's site, they had cheaper advertised rates than I am being offered!

So I asked the broker why. Here is the response

It’s because your loan is on investment properties, and banks are now quoting higher rates on investment property loan as opposed to owner occupied – basically you do not get their special rates.

When I spoke to your account manager last week she did advise that it was as business loan but could still give you a discount off the standard rate just not as low as the 4.29%. So you will get a discount just not their special rates.

I hope that helps.

Does this make sense? Seems like I need to look around? i.e. consider changing banks?

[eri]

i went to my new regular bank

and my old regular bank

i let both know i was shopping around

my old bank was keener and got back to me first with an acceptable rate

the new bank still hasn't gotten back to me

no sense of urgency, seemed confident they could match any offer if needed

but to match and offer, they first have to make 1

nothing's been signed yet so who knows....

but if there's 1 thing a bank likes more than getting a new customer

it's pitching 1 from a competitor

[Learning]

Yes, it seems the current bank (which ever bank it happens to be at the time) is never the first to offer the best deal but almost always matches (or close to) it.

They know that unless you’re really unhappy with them, you won’t got through the hassle of switching for less than a couple hundred bucks.

[Davo36]

Yeah in January I think I'll go and have a chat with some other banks.

About 5 years ago I shifted from ANZ to ASB. ANZ didn't think I'd leave...

[JBM]

The biggest problem I see with locking in so long is that it neutralises your negotiating power when the short term rates expire.

Say $400k at 4.2% for two years and $200k at 6.2% for ten. After two years the bank wants to beef up its margin and offers no discount on the $400k to refix. What will you do? Break the $200k with eight years left, the fee will be enormous.

It certainly depends on your plan going forward ...and where you see rates as well over the next decade >>what I'm thinking about to protection on any spike higher in rates ..

(what i have been offered by WP today)

On total 580k lending > 200k 5yr fixed 5.39%
>250k 2yr fixed 4.39%
>130k on revolving credit floating rate 5.35% now from the investments from the 580k I'm confident to have the 130k paid off within two years if not earlier .... then once the 2yr fixed comes due I can move to revolving credit and let the commercial gross incomes work to pay of another chunk till 5yr comes due ...

[JBM]

Yeah in January I think I'll go and have a chat with some other banks.

About 5 years ago I shifted from ANZ to ASB. ANZ didn't think I'd leave...

In talking with TSB to shift $1500 ANZ $4000k today ....my legal costs to shift $1500-$2000 my current fixed terms coming due mid 2018
what I have found to date is ANZ work the hardest to get your business but don't give you the best rate once you come due to re-fix (in the past ANZ would not match a westpac rate)

[Don't believe the Hype]

Guys, when I looked on ASB's site, they had cheaper advertised rates than I am being offered!

So I asked the broker why. Here is the response

It’s because your loan is on investment properties, and banks are now quoting higher rates on investment property loan as opposed to owner occupied – basically you do not get their special rates.

When I spoke to your account manager last week she did advise that it was as business loan but could still give you a discount off the standard rate just not as low as the 4.29%. So you will get a discount just not their special rates.

I hope that helps.

Does this make sense? Seems like I need to look around? i.e. consider changing banks?

In Aus the banks have been charging a premium on investor loans for a number of years... sounds like their management team have reviewed the profitability of this strategy and are now implementing the same here.

Shop around for sure but I think you'll fid all the Aus banks are going to improve margins this way. just add the cost to the rent and move on.

[Perry]

A Yawn a Year

How's that prediction looking, now?

Homeowners Warned On Interest Rates
NZPA
05/01/2011

A leading bank economist is warning home buyers that current below-
average fixed term mortgage rates could start rising "quite rapidly".

Westpac senior economist Dominick Stephens said people had flocked
to the value of low interest floating rates, in the wake of the global
economic crisis and subsequent slow recovery.

[Nick G]

You might need a new broker not a new bank. But yeah, nothing like a loan letter from somewhere else to change the tune.

Guys, when I looked on ASB's site, they had cheaper advertised rates than I am being offered!

So I asked the broker why. Here is the response

It’s because your loan is on investment properties, and banks are now quoting higher rates on investment property loan as opposed to owner occupied – basically you do not get their special rates.

When I spoke to your account manager last week she did advise that it was as business loan but could still give you a discount off the standard rate just not as low as the 4.29%. So you will get a discount just not their special rates.

I hope that helps.

Does this make sense? Seems like I need to look around? i.e. consider changing banks?

[JBM]

Anyone fixing longer-term rates ?? best rates going?