Will New Zealand’s interest rates fall again this week?
Filed under: Banks, Interest Rates, Credit Cards & Mortgages in NZ, Property & General Investing
The reserve Bank of New Zealand meets again on Thursday this week, to decide on Interest rates.
According to Interest.co.nz – it is expected that Alan Bollard (bless his little cotton socks) will reduce the official cash rate (OCR) by 100 points (That’s 1% to us normal people).
Of course – this is no use whatsoever to me personally when I have 2 large fixed rate mortgages with another 4 years to run, and I know I’m not alone.
And it won’t help that many first time buyers as the banks are being rigidly unhelpful at the moment – you need a 20% deposit to be able to access the new low mortgage rates. For the same reason – I am not the only property investor who can find really good cashflow properties; but cannot actually but them.
Interestingly – if Mr Bollard does reduce the rate by 1% -taking it to 4% – it will mean that New Zealand has the lowest official cash rate it has ever had since the OCR was introduced in March 99 – when it was at 4.5%.
You know – the one thing that really peeves me about all this – is that Mr Bollard has not apologised for screwing up the interest rates in the first place. Now – it is just my opinion – as a non-economist – that he did in fact screw up – but I vividly remember his snotty pronouncements last year that he had to hammer us all for spending too much money, and he would keep raising rates till we did as we were told.
So having left many people, including banks and mortgage brokers, with the expectation that rates would keep climbing and climbing till he had inflicted enough pain – he then did the most amazing U-turn and rates have been dropping like a stone ever since. Which leaves a lot of people up the swanny. If you can’t access the new low rates – you are still paying around 9%-10% on your mortgage, with no way of getting out of it. (The Break fees basically mean you pay the next so many years of interest in one hit).
It is an uncomfortable time for many people. We are personally in an OK position. We did not have time to overextend ourselves with our rental properties, and we still have a relatively high income – which means we can actually pay all our mortgages – even at the high rates. And we do have emergency funds to call on, and shares we could sell if we had to. Many people who fixed their mortgages in the belief that Alan Bollard would keep raising rates as he said he would – are not in such a good position.
While I do not think either the banks or the Reserve bank should take responsibility for the decisions of individuals to overspend – I do feel that they could be just a little bit more contrite about their own roles in the ensuing financial crisis. As ever – it is businesses and banks that get guarantees and bailouts.
Individuals get bugger all and forced into Mortgagee sales.
Related posts:
- Lowering Interest rates in New Zealand – what does it mean for Migrants to New Zealand?
- Why are Credit Cards still charging such high interest rates in New Zealand?
- Why exactly should interest rates in New Zealand go up?
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Tue, 27th Jan 2009 1:45 pm
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Wed, 28th Jan 2009 5:19 pm
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