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Thread: Interest Rates

  1. #1241
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    Nov 2008
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    Default

    Tony Alexander[chief economist for BNZ]recommends floating in todays interest climate.[you can google for his newsletter] i think you decision to get rid of the debt is very wise-the sooner the better--It could get ugly out there at any time.

  2. #1242
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    Oct 2006
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    Auckland
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    Skid, yes we could not do anything till now as we fixed for 5 years on a fairly high rate so now we are able to go P&I while still paying the same amount. The upside
    of coarse is the rent has increased also which puts us in a better position income wise. Just need some capital gain now!

    FH

  3. #1243
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    Quote Originally Posted by freezinhot View Post
    What do you mean by 30% equity?
    They'll only loan you 70% of the property's value.

    Someone more knowledgeable than me: could you get away with taking the other 30% from a revolving credit with another bank, secured against another property? I don't see why not...

  4. #1244

    Default

    This link should help - its a summary of rates per lender.

    http://www.interest.co.nz/borrowing/mortgages

  5. #1245
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    Apr 2005
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    Wellington
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    You've been paying over the odds on interest rates for the past 5 years, so why jump in and immediately begin paying over the odds again for another 4 years?

    I'd put it all on floating, and continue paying it off as fast as you can (if that's what you want), you'l pay it off even faster on floating than you would on fixed.

    If you go fixed you're immediately paying another 1.2% more than you would be on floating.

    The way I see it, if you go floating you are GUARANTEED to be saving money right now and virtually guaranteed to be saving money for the next year at least. If you go fixed you are GUARANTEED to be losing money from day one, and you have a POSSIBILITY to be saving some money 1 or 2 or 3 years down the track. Yes, it's a gamble whichever way you look at it, but to willingly pay more interest on your loan from day one is silly imho, more so because you have been doing it for the past 5 years already.

    The time of fixed rates has come to an end now...

  6. #1246
    Join Date
    Sep 2004
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    Hastings
    Posts
    15,496

    Default Some Quotes - One Year On

    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.

    But it would be prudent to keep a close eye on some key economic
    indicators in the short to medium term to see if floating rates still
    provided the best value, he said.

    Consumers preferring a floating rate now might find they ended up
    paying more over the next two years or so than if they took a fixed
    rate, Mr Stephens said.


    Bank Forecasts Recovery Will Be A Hard Slog
    James Weir - The Dominion Post
    05/01/2011
    The recovery will be a hard slog, but strong economic growth should
    emerge in the second half of this year, according to ANZ Bank forecasts.

    But the rebound will be off such a low base that "it won't feel
    great", with the near-term outlook weaker than expected in the bank's
    forecasts just three months ago.

    New Zealand was not out of the woods yet and another "negative shock"
    could yet push the economy into a double-dip recession, ANZ warned.

    The economy is forecast to expand 3.2 per cent in calendar 2011, and
    just under 3 per cent the following year. Growth in 2010 is estimated
    to be about 1.6 per cent.

    "The economy continues to drag itself slowly out of the hole," ANZ
    said, helped along by low official interest rates and strong commodity prices.

    Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

  7. #1247
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    Oct 2006
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    Auckland
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    Default

    Quote Originally Posted by spurner View Post
    You've been paying over the odds on interest rates for the past 5 years, so why jump in and immediately begin paying over the odds again for another 4 years?

    I'd put it all on floating, and continue paying it off as fast as you can (if that's what you want), you'l pay it off even faster on floating than you would on fixed.

    If you go fixed you're immediately paying another 1.2% more than you would be on floating.

    The way I see it, if you go floating you are GUARANTEED to be saving money right now and virtually guaranteed to be saving money for the next year at least. If you go fixed you are GUARANTEED to be losing money from day one, and you have a POSSIBILITY to be saving some money 1 or 2 or 3 years down the track. Yes, it's a gamble whichever way you look at it, but to willingly pay more interest on your loan from day one is silly imho, more so because you have been doing it for the past 5 years already.

    The time of fixed rates has come to an end now...
    Spurner, I see your point but we are looking for certainty but your advice is very good, What if we fixed a portion of the loan at 6.7% say 100k, and left the 76k floating? Therefore if we miss the boat on any good fixed
    rate such as the 6.7, we dont completely miss out because we fixed the 100k.

    Looking back we were silly to fix at that rate and were better off floating some of the loan, but we wanted a fixed amount. We know better to do that now but we really want to pay down debt now so looking for the best solution possible.

    Thanks
    FH
    Last edited by Perry; 22-01-2012 at 09:36 PM. Reason: fixed typo

  8. #1248
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    Christchurch
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    Default

    Why do you think 6.7% is a good rate?

  9. #1249
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    Oct 2006
    Location
    Auckland
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    Default

    Because its better than 7.95.

  10. #1250
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    Jan 2008
    Location
    Wellington
    Posts
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    Default

    Just to provide one alternate method of what the "lowest" fixed interest rate in NZ might be in trying to decide whether to fix or not.

    In the USA -- the land of cheap money where their 'OCR' is 0.25%, residential fixed rates for a 30-year term, for very sound borrowers was 4.2% pa (as of October 2011 )

    You could take that figure of 4.2% as an indication of the lowest rate possible in NZ. In NZ, generally the interest rates are always one of the higher figures in the OECD/developed world. So the lowest rate in NZ will be higher than 4.2% (generally 2-3% at least in my experience -- others on the board may have differing views).

    Counter balance this with a small reduction/discount in the the rate because of lowered rate risk due to NZ's lower length of "fixed" term (4-5 year vs 30 year ).

    Now make up your own mind mind, taking into account loan amount/equity you have, your need for "certainty", your ability to take advantage of the lower variable rates to pay down quickly, the chances of leaving it too late to fix.


 

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