New Zealand Banks and the Economic Crisis.
Filed under: Banks, General Budgeting, Interest Rates, Credit Cards & Mortgages in NZ, Life in New Zealand, Property & General Investing
Ok, so I think we all know that the western world in is the financial toilet, and that governments and reserve banks are slashing interest rates and telling us to go and spend up large and do our civic duty and keep the economies ago.
But how are the New Zealand Banks behaving right now?
Some of them – pretty damn poorly in my opinion.
I currently use 3 banks – ASB who have my main accounts and my home Mortgage, and ANZ and Westpac who each have an Investment Mortgage.
Like many people, we have a few mortgages on Fixed rates, and so because of the rapidly falling base rate – we’re ending up with Fixed Interest rates higher than the floating rate – and quite a bit higher than the current fixed rate.
So, also like many people – I investigated the options for breaking those fixed loans before the current round of rate cuts last week.
Both ASB and ANZ worked out the break fee based on the difference between the Interest rate we were currently on, and the rate that they were offering at that time. The fee is then worked out based on the amount of time the fixed rate has left to run.
With ASB, it meant our two fixed rates would cost a total of $5000 to break. That is for a 1-year fix with 10 months left to go, and a 2-year fix with 17 months to go.
ANZ wanted a whopping $19,000, to break a 5-year fix with 4 years to go.
Westpac on the other hand wanted an absolutely ginormous $43,000 to break a 5 year fix with 4 years to go.
Why the big difference – well Westpac don’t calculate on the difference in the rate you are on and the rate at
the time. The work it out on the difference in the rate you are on and the WHOLESALE rate – which is quite a bit lower than the rate we mere mortals pay. So you get stung – badly.
So, not having a handy $63,000 sitting around that I can throw at the banks – I’ve had to keep my Investment mortgages at the current rates. I’m not a happy bunny – but that’s the risk you take when you used Fixed Rates loans. To break without the fees, you have to do so when the Current rate (or with Westpac the wholesale rate) is the same or higher than the one you are on.
Honestly – it’s a game of chicken. You are trying to dodge between the banks and the Governor of the Reserve Bank and work out who’s going to do what, and which way you should jump.
And of course the banks don’t pass on the entire drop. Because that would be too kind.
While I don’t think we can blame the banks for the current crises (we after all spent the money collectively on one helluva shopping binge) – I do think that they are getting a nice fat bail out round the world from Governments and the entire financial sector. Would it really hurt their bottom line and shareholders if just for a while they passed on some of that goodwill to the customers of the banks??? Gave us a bit of a bail out??? Didn’t try to extort in some cases hundreds of thousands out of their customers to break the fixed rates????
After all – these are highly unusual times, and the huge and rapid drops in the Base rates are basically unheard of. In the first quarter of 2008 – rates were pegged to go well over 10%. Not drop through the floor to around 7%.
With apparently 70% of all mortgages in New Zealand being Fixed Rates – the lowering base rate doesn’t help that many mortgage holders. And because at the same time as lowing the rates, the banks are demanding higher deposits – the situation doesn’t help First Home Buyers either.
And you know the most galling bit? Both ANZ and Westpac, when we took out these loans, were desperate to snatch ALL our bank accounts from ASB. They would prove their worth they said. They would win our business! They would show us how much better than ASB they were.
All I can say is that I will remember how Westpac, 
ANZ and National Bank have behaved in the past few weeks, and when things change round again – as they will – and they again want to throw money at me – I will chuckle – and go elsewhere.
Lowering Interest rates in New Zealand – what does it mean for Migrants to New Zealand?
Filed under: Banks, Getting to New Zealand, Interest Rates, Credit Cards & Mortgages in NZ, Life in New Zealand, Property & General Investing
For the past 3 years in New Zealand, Interest rates have been going one way – up. When we first took out our mortgage we could get around 7.5% on a two year fixed rate. By July this year – we were lucky to get under 10% as a fixed rate, and the floating rate was almost 11%. And things were looking a bit grim as rates were predicted to keep rising.
This happened because Alan Bollard, the governor of the Reserve Bank of New Zealand wanted us all to stop spending money and for house prices to go down. Which happened this year, as we were hit with 
High Interest rates
High Petrol Prices
High Food Prices
High Heating bills
High House Prices.
So after a year of ratcheting the interest rates up really fast, the economy in New Zealand came to a screeching halt early this year.
So then, Mr. Bollard – without ever saying he may have stuffed things up a bit – started dropping the interest rates again. Only this time – he did it really, really fast. You see they went up about 0.5% every time he made an announcement, but going down – it’s happening at 1% or 1.5%.
This is pretty much the same all over in the western countries as we struggle with one helluva financial meltdown.
So what does it mean here in New Zealand, and what does it mean if you want to Emigrate to New Zealand.
Well, you can now get a fixed rate mortgage for 2 years at a pretty reasonable 6.85% to 7.2% at the major banks (Interest.co.nz). This is cheaper than it’s been at any time since we moved here 4 years ago,
Which is good news right? (Well for New Zealand anyway – where you need to remember that interest rates are always higher than in the UK). Only not quite so good for many people. Because the banks now want 20% deposits before lending any money – and in some cases 30% if you want to buy an investment property.
And not many people in New Zealand have that kind of savings. And with house prices in the UK dropping as well – as a migrant you may not have the 20% deposit either.
So – as if often the case – the banks giveth with one hand and nick it straight back with the other one.
When looking at your dream home on the Internet, remember that you may now need a big deposit. And also take into account that the lending rules from the banks are changing rapidly at the moment. We have just had a case where the National Bank held back our application for 3 days so that it would come under new finance rules and whereas we could have got 90% lending on a property, they would now look at only 80%.
If you are a migrant with some savings you can bring over – then you are in a VERY good bargaining position for you new dream home. So bargain hard! If you have no savings – then right now – it may be a bit tricky to get a mortgage!
Beaches in New Zealand Part 2.
Filed under: Beaches in New Zealand, Getting to New Zealand, Life in New Zealand
We are now back from our few nights at the beach, and it was even more stunning than usual. Partly because this time – we didn’t have to leave at 4pm to get home and make dinner.
We stayed at a little self contained flat called The Dunes. This is part of a house that sits literally just behind the dunes at the beach, so you can walk directly from the house, over the Dunes and you are on the beach itself.
So, what was so perfect about the stay?
The beach at dusk
Well, the flat was just right. It actually had quite a “seaside” feel to it. There are two bedrooms, so you can fit 2 kids in if you have them, and a Barbie is provided – though we cheated and had breakfast at the local shop and had Fish and Chips from for dinner – eaten on the beach of course.
Clouds Over Riversdale
And other than that – the perfection was provided by the beach itself – we could just sit on top of the dunes and watch the world go by. Not that there was much world to watch – but then that’s the whole point of going there. So we made do with watching the most spectacular sunsets, and even got up at 5am to watch the sun come up over the sea.
The sun rising over the sea.
It was incredibly beautiful, and a truly wonderful way to spend a wedding anniversary, cuddled up with a nice glass of New Zealand wine, and watching the sunsets and sunrises. And for me – the best of all was getting to go to sleep hearing the sound of the sea.
Last year for our Anniversary – we went to Fiji: spent a fortune on a nice hotel, and eating out, and that’s not even thinking about the flights. But the 2 nights we spent at the beach in New Zealand was actually so much better. It was quieter, the sea was actually cleaner, and the beach was pretty much empty.
I can highly recommend staying at The Dunes. The owner Carolyn left us to ourselves, other than just popping her head in to check everything was OK. This was just what we needed – to be given a bit of space and some peace and quiet. It cost us just $120 a night, which includes breakfast cereals, and toast. You do have to take your own food other than that, and there is no cooker, just the Barbie, a microwave and a single electric ring. Which really is all you need. J You cant see the sea from there, but you can hear it and it takes just half a minute to walk over the dunes.
Beaches in New Zealand.
Filed under: Beaches in New Zealand, Getting to New Zealand, Life in New Zealand, The Book and Website
It’s almost 6 years since we first visited New Zealand. We came here on our honeymoon, and fell in love with the country so fast. We were already talking about emigrating to New Zealand by the time we had got to the end of our first week.
So, as a pressie for our 6th wedding Anniversary – Hubby is taking me away for a few nights to my favourite local beach – Riversdale.
Where we live in the Wairarapa – it’s known as a rural farming county – but we still have the most amazing beaches. One of the things that truly blew me away about New Zealand – was the fact that the not only are the beaches so clean – they are also for the most part – empty.
There have been many times that we have been to Riversdale, and we are the only people on the whole beach – about a mile of clean, while sand and turquoise sea.
It has to be seen to be believed – so here is a photo of the beach on a busy day J
In fact – heading to the beach has been my best cure for any bouts of Homesickness I have had. Being so far from my family and friends who have known me for many years – sometimes I need to just get away and chill out. Ever since we arrived here as migrants 4 years ago – the beaches of New Zealand have been the places I can go to recharge and remember why I am here.
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