Some faulty logic here - a 0.5% interest rise is the same dollar amount regardless of the current starting interest rate.
for instance on a $500,000 mortgage a 0.5% interest rebate rise is a $2,500 increase in annual interest payments, regardless of what the previous amount is.
Good call, I didn't re-state the underlying assumptions that the article put forward. That house prices are already overinflated as a result of low interest rates, and people are paying a very large percentage of their incomes on loan costs. I'm comparing your 0.5% interest rise on a $500k mortgage in 2007, to a 0.5% interest rise on a $900k mortgage today.
This argument might have some merit if it were the RBNZ that was driving an increase in interest rates as a means of slowing the economy (to reduce inflation) through the OCR.
Agreed entirely! But again this was an assumption in the article - While ANZ expected that there would be only a gradual increase in interest rates over the next two years, in which case Auckland house prices would tread water, Bagrie said it was "game on" if inflation rose faster than expected
for instance on a $500,000 mortgage a 0.5% interest rebate rise is a $2,500 increase in annual interest payments, regardless of what the previous amount is.
Good call, I didn't re-state the underlying assumptions that the article put forward. That house prices are already overinflated as a result of low interest rates, and people are paying a very large percentage of their incomes on loan costs. I'm comparing your 0.5% interest rise on a $500k mortgage in 2007, to a 0.5% interest rise on a $900k mortgage today.
This argument might have some merit if it were the RBNZ that was driving an increase in interest rates as a means of slowing the economy (to reduce inflation) through the OCR.
Agreed entirely! But again this was an assumption in the article - While ANZ expected that there would be only a gradual increase in interest rates over the next two years, in which case Auckland house prices would tread water, Bagrie said it was "game on" if inflation rose faster than expected
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