Mortgage Rates go up

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10 years 6 months ago #29905 by max2
Mortgage Rates go up was created by max2
Who got a letter today from the Bank advising their mortgages rates are going up? I thought Bollard left them where they were last week... and aussie dropped theirs the week before..:confused::confused::confused::confused:

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10 years 6 months ago #404380 by spoook
Replied by spoook on topic Mortgage Rates go up
My bank has not changed, as at 1/12 that is. Have had no notifications ... yet.

There are no bad questions only those that are not asked.
"You are responsible, forever, for what you have tamed"

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10 years 6 months ago #404381 by Mich
Replied by Mich on topic Mortgage Rates go up
Ours actually reduced theirs a couple of weeks ago (not that we benefited as we're fixed)... Bummer, Swaggie. Did they give a reason?
Cheers, Mich.

Good exercise for the heart is to bend down and help someone up. Anon.

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10 years 6 months ago #404390 by max2
Replied by max2 on topic Mortgage Rates go up

Mich;400068 wrote: Ours actually reduced theirs a couple of weeks ago (not that we benefited as we're fixed)... Bummer, Swaggie. Did they give a reason?
Cheers, Mich.


No Mich. Ours are with BNZ. Perhaps its time to go bank shopping....

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10 years 6 months ago #404391 by reggit
Replied by reggit on topic Mortgage Rates go up
What have they gone up from/to Swaggie? Floating/variable rate?

Take a break...while I take care of your home, your block, your pets, your stock! [;)] PM me...

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10 years 6 months ago #404398 by Gracelands
Replied by Gracelands on topic Mortgage Rates go up
the BNZ variable rate went up from 5.59% to 5.74% from 15 December. Surprised me too.

"Just living is not enough. One must have sunshine, freedom and a little flower."
Hans Christian Anderson

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10 years 6 months ago #404404 by DiDi
Replied by DiDi on topic Mortgage Rates go up
So guys - why are you having a problem with this? The world is collapsing around our ears and if you thought your mortgage rates weren't going to go up, then you are living in dream land.

When my girls were buying their homes, my advise to them was if you can't service your interest rates tripling, then you can't afford to buy. Reason? We lived through 22-25% interests rates back in the early 80's along with a new Livestock Tax and I watched my friends lose their farms etc. I was one of the lucky people then with parents who were able to bail us and it took at least 10 years to pay them back.

I am one of the disadvantaged in this country in that I have sold my LSB and the interest rates are so low that I am lending money to the banks at the pathetic interest rates we depositors are being paid against inflation etc so I want interest rates to go up!

Maybe the BNZ have finally worked out that low interest rates are setting us up for another boom and bust cycle (October real estate sales would support that) when National came into being on the "we need to save" mantra. Low interest rates encourage spending for most (although I accept that many have started trying to pay down debt) not savings, so maybe a Bank has finally clicked that they need to slow it down. That means a rise in interest rates. Mind the interest.co.nz site shows no increase to depositors (the opposite in fact) so one has to wonder if this is about increasing their (BNZ) profits against looking after their customers - including their depositors.

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10 years 6 months ago #404408 by max2
Replied by max2 on topic Mortgage Rates go up
I have a problem with it Didi when Bollard decides its best for the country to keep the rates where they are, the rest of the world are paying far less than NZ, and those who caused the world financial markets to collapse are sitting back still earning mega $$'s when they should be out of work at best or in jail at worst. [:(!][:(!][:(!][:(!][:(!]

And with all due respect, it was your choice and you made a conscious decision to sell when you did. I don't think the word disadvantaged is appropriate to use.

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10 years 6 months ago #404409 by Organix
Replied by Organix on topic Mortgage Rates go up

DiDi;400092 wrote: So guys - why are you having a problem with this? The world is collapsing around our ears and if you thought your mortgage rates weren't going to go up, then you are living in dream land.

When my girls were buying their homes, my advise to them was if you can't service your interest rates tripling, then you can't afford to buy. Reason? We lived through 22-25% interests rates back in the early 80's along with a new Livestock Tax and I watched my friends lose their farms etc. I was one of the lucky people then with parents who were able to bail us and it took at least 10 years to pay them back.

....

In a talk given by Gareth Morgan last year he promoted the following 'stress test' on your financial standing: Can you survive the halving of your real estate holdings' value OR the halving of your household income (i.e. the loss of employment by one partner)?

In the face of international economic events one (or even both [:0]) are distinct possibilities for many people and the obvious way to move toward being able to survive this stress event is to retire debt by offloading property or shifting investment focus. We in NZ escaped the global financial crisis courtesy of our Aussie banks' might but as the current crisis esculates we will not get off as lightly in the coming years :(

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10 years 6 months ago #404413 by max2
Replied by max2 on topic Mortgage Rates go up

Organix;400097 wrote: In a talk given by Gareth Morgan last year he promoted the following 'stress test' on your financial standing: Can you survive the halving of your real estate holdings' value OR the halving of your household income (i.e. the loss of employment by one partner)?

In the face of international economic events one (or even both [:0]) are distinct possibilities for many people and the obvious way to move toward being able to survive this stress event is to retire debt by offloading property or shifting investment focus. We in NZ escaped the global financial crisis courtesy of our Aussie banks' might but as the current crisis esculates we will not get off as lightly in the coming years :(


I am hearing that from other sources too Organix. Its quite scary for the coming year, and I personally believe that people (if they are not already doing so) will have to diversify their income earning abilities, more than they currently are, if they are to survive and remain as they are.

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10 years 6 months ago #404429 by Organix
Replied by Organix on topic Mortgage Rates go up

swaggie;400101 wrote: I am hearing that from other sources too Organix. Its quite scary for the coming year, and I personally believe that people (if they are not already doing so) will have to diversify their income earning abilities, more than they currently are, if they are to survive and remain as they are.

....And minimise outgoings. Self sufficiency is making a lot of sense and LSBs become a valuable asset in that regard :)

Harm Less Solutions.co.nz
NZ & AU distributor of Eco Wood Treatment stains and Bambu Dru bamboo fabrics and clothing

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10 years 6 months ago #404430 by DiDi
Replied by DiDi on topic Mortgage Rates go up
swaggie - the word disadvantaged is very real in the current climate as it is the savers/investors/depositers who are propping up the borrowers in the current climate. Bear in mind we are the generation here in NZ who had no family benefit, paid 67%? tax in the $, no creches, not free childcare, paid $70 for our kids school shoes and 22% interest rates. No interest free university for our kids either. Why the hell should we be propping up a ballooning welfare system when in comparison, life is bloody easy in comparison. You also need to take into account what a $ was worth 30 years ago against a $ today.

When you put together all the things like Working for Families (no tax paid on $100,000 income for many) the Welfare system paying accommodation allowances for those whose income is less that 25% of accommodation costs etc means that a huge number of people in this country are living on the backs of other tax payers who don't "qualify" for those benefits (i.e. those without children, including me) then why on earth should those with debts (whether from a house/farm purchase /overseas holiday/credit card blow out) expect their bills to be paid for by others? If you get Working for Families then you are a beneficery, just as those over 65 are and yet all shudder and label beneficeries as the dole bluggers. No so.

I saved and worked hard all my life so why should I now prop up to my detriment, the spenders of today? I want interest rates to rise and the sooner the better!

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10 years 6 months ago #404439 by Aria
Replied by Aria on topic Mortgage Rates go up
Didi - there is too much in there that is either wrong, or slants reality in such a manner as to warrant comment. Sounds like you and I are roughly the same generation. Here are some clarifications.

- There was a modest transfer payment to families called a family allowance.
- Tax then (like now) was not a "flat income tax" model and therefore the top tax bracket (you mention 67%) would only have been paid on that income over a certain threshold.
- Back then there was no GST - so generally you can subtract 15% for any/all tax rates in making a more robust comparison, i.e. 67 - 15 = 52
- As for cost inflation, 30 years ago, I used to put a few pennies in a glass bottle of milk at the end of the drive. Home delivery was free.
- A family today on a $100,000 income if receiving a tax credit under Working for Families would not "pay no tax" as you imply. The amount of the tax credit diminishes as the family income increases. From about $80,000 upwards that credit amounts to a few dollars a week (far less than that family benefit of 30 years ago in inflation adjusted terms)
- Any person(s) might qualify for the accommodation supplement - not just those with families.
- Most people work hard all their lives - the fortunate are those who can afford to save as a result of their labour. Given that over the past 3 -4 decades wages have not risen at the same rate as inflation, many wage earners today are unable to save. The term "working poor" is a common means of describing this socio-economic trend.
- Your bank deposits are not "propping up" spenders of today. Systems such as fractional reserve banking, off balance sheet accounting, and 'new' (largely unregulated) financial instruments are responsible for the unprecedented increase in money supply that has gone on in recent decades.
- You claim to have sold your property recently. Was there a dollar amount in difference between what you originally paid for it and what you sold it for? If so, that difference (i.e. earnings which you have since converted to savings) likely had no tax paid on the amount earned. Those without any property holdings are unable to earn tax-free in a similar manner. Effectively, you converted your capital gains "tax credit" to savings. Bear in mind it (capital gains) is a "tax credit" on income earned - in the same sense that WFF is a tax credit on wage income earned.

I guess my point is that I look at how we (i.e. the generation of over 50s) had it versus how my kids have it - and I think generally our ability to earn and save was far and away advantaged over the situation today.

And the point is - you always have the opportunity to invest your money in a more productive enterprise. Higher risk than a bank, but also the prospect for higher returns.

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10 years 6 months ago #404445 by Kilmoon
Replied by Kilmoon on topic Mortgage Rates go up
Good points raised by all of you, but you have to remember one thing. The OCR (what Bollard plays with to 'try' and control what the economy does - TUI add anyone?) is no longer connected to the interest rate that you will pay on debt.

The banks have to borrow on the international money markets, and with...
- the EU imploding (gone by Christmas anyone? - how its still here is due to extend and pretend politics),
- the US is up the proverbial creek and lying about their figures (check out www.oftwominds.com/blog.html for some a very good discussion/graphs of what is really occurring in the US), and
- China having lowered their growth forecasts and with their property bubble set to burst (this means Australia is heading down due to lower mineral exports to China, and we will too as they are our biggest market for our goods),

...which all equate to one thing....

- banks have to pay more to borrow money from the international money markets to lend to Kiwis. Ergo, interest rates will rise, irrespective of what Bollard does with the OCR. Get used to it.

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10 years 6 months ago #404453 by Aria
Replied by Aria on topic Mortgage Rates go up
I agree - the bank economists have locally implied much the same in referring to this as "decoupling" - meaning the OCR is of little influence. Central banks have effectively lost control.

But I do think the newly introduced capital ratios (I think that's what they're called) - depending on the rate at which Bollard raises those ratios could well see more competitive rates paid on local deposits. That said however given the nature of fractional reserve banking and the fact that not alot of new borrowing is going on - it too may have only a long slow effect on deposit rates.

The real problem is rolling over the mountains of existing debt already in our economy - and the int'l cost of borrowing is always going to be the bigger influence in the foreseeable future, I suspect.

It's all guesswork given the complexity of the global system but I think one thing is certain - tomorrow is going to produce certain global systemic shocks that none of us as individuals can adequately prepare for.

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