How to beat the banks?
Filed under: Banks, Economics, Interest Rates, Credit Cards & Mortgages in NZ
I don’t know if the Dom Post are recycling news today (either they couldn’t get to work because they have swine flu, or stayed home cos its cold), but there is another article in the Dom Post today about the finance minister telling us how to beat the banks.
Only he doesn’t.
He simply says that if the banks don’t drop their interest rates – customers will go elsewhere. Which is unlikely to happen. As explained here from the last time this article was published.
You know – I’ve put a lot of thought into this – and as far as I can see the only way to really beat the banks (in the word of a rather old movie Wargames) is “not to play”.
At the moment in New Zealand, if you have a mortgage, the banks have you over a barrel. You can’t move banks unless you have 20% equity in your house – and a lot of people don’t have that (because the banks lent them 90%+ 2 years ago, and values have dropped). So you are stuck there, and they can charge high interest rates because they know you can’t move.
If you want to really beat the banks –get rid of the mortgage. Fast. And then watch the banks weeping because they can’t screw you for thousands in extra interest. I’ve been stuck in this situation for 18 months now – where I wanted to buy another rental and the banks told me I needed to pay down about $20,000 off my current lending. Which I did within a few months, by which time they had changed the rules, and needed more paying off before they would re-lend. In the 18 months since then, I’ve reduced the personal mortgages by over $70,000. And I’ve decided that rather than borrow more money to buy more rentals – I want the bank to have absolutely no hold on our house whatsoever. I’m going to keep going so that one day (in the not to distant future I hope) I can tell the bank to get stuffed.
I don’t really know what Mr English is expecting – the banks are not taking any notice of calls to drop the rates – and why would they if the finance Minister won’t do more than wring his hands. I still think the first step is to remove the deposit guarantees. When the banks start dropping the rates to a reasonbale level, then they can have them back. But until there some fairness applied here – the taxpayer should not be gaureteeing bank deposits. Its just wrong.
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Related posts:
- Now even our MP’s want to know why the banks are ripping us off.
- Beating the banks with the Mortgage.
- New Zealand Banks and the Economic Crisis.
Comments
3 Comments on How to beat the banks?
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Interest Rates » How to beat the banks? | Avalon's Blog on
Wed, 17th Jun 2009 11:44 am
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William Knight on
Thu, 18th Jun 2009 12:17 pm
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Avalon on
Thu, 18th Jun 2009 7:02 pm
[...] Read the rest of this great post here [...]
Nice post. Alas such a concept is beyond us earnings-feeble writers.
Ah well – we know how to work the system 
It wasnt till I came to New Zealand that I even found out you COULD get rid of your mortgage early, and truly nark the banks off. Ive spent about 6 years now budgeting and working hard at this – now its starting to get a bit easier so we pay it off even faster.
Having a high income helps (but then we also have high fixed expenses), but Anita Bell (my hero and author of How to Pay Your Mortgage off in 5 Years) had a small income when she did it.
Having the rentals helps – thanks to the nice fluffy tax system Hubby isnt paying the top rate of tax anymore and we can use the refund to help pay off the mortgages. A lot of people use them as extra spending money.
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