What’s happening with NZ interest rates?

August 30, 2010 by
Filed under: Banks, Cost of living, Economics, General Budgeting, Interest Rates, Credit Cards & Mortgages in NZ 

Well, the short version is: they are going up!

The longer version is that it looks like we are the only sodding country whose central bank seems to want to increase base interest rates!

If you pop onto the HiFX website, they keep a running sidebar of Base interest rate announcements around the world. Not only do we still seem to have nearly the highest rates (other than Australia lol) but ours is going up when the others are holding.

Incidentally, thats also the page that tells you how bad the exchange rate is right now. Sorry.

There is some sort of good news in the papers today, it seems that Bollard – the governor of the Reserve Bank, may actually be stopping with these silly rises, because – guess what – the economy isn’t actually picking up as well as it needs to (well Helloooo! My Mortgage is getting more expensive – where the hell do you think Ive got any money to go out and buy stuff with!).  And apparently – the employment figures here were supposed to improve , and they actually worsened.  Now, Mr Bollard hasn’t actually said himself that he wont be raising interest rates – the “economists” have said that they think the chance is now 25% instead of 75% that he will raise them. But that’s the way it works – economists blather on for weeks before an announcement is due, telling us what the Governor is going to say, which always makes me wonder why the governor bothers with the announcements in the first place.

Theres a wonderfully obtuse piece of prose in the article which I just had to share:

“If the economy pushes along at near-potential rates of growth, the cash rate must head back towards neutral. Neutral is not 3 per cent,” said BNZ head of research Stephen Topliss.

I have absolutely no idea what the hell that means lol.  What on earth is a “near-potential rate of growth”?

So what’s the bottom line?

Well, mortgages are more expensive. Floating rates are around the 6.15% – 6.75% range, up from about 5.5%. 2 years rates are around 6.75% and 5 year rates are around 7.75% for standard mortgages. The 5 year rates seem to be fairly steady at the moment, but the floating and 2 year rates have increased with the 2 rate rises.

Even if Mr Bollard doesn’t increase the OCR on the 16th September – I would be looking at factoring in some more rises if you are looking at needing to buy a home in New Zealand in the near future. He still seems intent of costing us a small fortune in interest and refusing to let us get ahead financially.

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Comments

5 Comments on What’s happening with NZ interest rates?

  1. Scott on Mon, 30th Aug 2010 1:23 pm

    2. I always thought the bloody banks here in NZ are in a monopoly, considering the total population of the place is equivalent to Birmingham, and we have what 11 banks fighting for the business ?, you’d think there would be some very special deals, but no, they will milk it as much as they can of course and keep an eye on each other. The banking situation here is very old, I only just got a Visa Debit in BNZ last year after being the norm in the UK. Backwards country, yet they bleet about being the first in the world with EFTPOS, well done, now come on NZ, step into the 12st century. And to be told that the mortgage is 6% yet they are borrowing at 2.5 or 3% ? highway robbers the lot of them. I wish I could have gotten a mortgage in the UK and bought a house here ;-(

  2. Paola Brett on Mon, 30th Aug 2010 1:33 pm

    3. Scott, I agree – I can’t stand the banking system here and all the charges for practically looking at your money, never mind anything else! I have friends working for banks in the UK and I keep asking them when they are going to muscle in on the NZ market and bring the UK style of banking with them to shake things up, but as you say it’s a wee population here, and therein lies the problem. Love Kiwibank, tho, but because I am British despite the Kiwi (my husband) being a Kiwi they wouldn’t give us a mortgage for 75% of the amount. Boo!
    Meanwhile, the government is giving staff 1% pay increase (although it increases depending on performance and appraisal results, thank goodness) and I got 2% – so yup, interest rates SUCK! Pah…
    Just as well there are lots of good reasons to live here, cos sometimes it ain’t easy on the pocket. :-)

  3. Deborah on Mon, 30th Aug 2010 3:36 pm

    4. “Love Kiwibank, tho, but because I am British despite the Kiwi (my husband) being a Kiwi they wouldn’t give us a mortgage for 75% of the amount. Boo!”

    I don’t understand that Paola. We’re both British and KB gave us a 75% mortgage.

    If they refused you for that reason (and put it in writing!) I’d be having a loud word or two in their ear and taking it to the Banking Ombudsman.

    While I dream of Nationwide coming to NZ and shaking up the OZ/NZ banking world, we rarely pay any bank charges. We have fee free accounts and if and when charges crop up, like at refixing our mortage time, complain and ask them to waive the fees. I’ve not yet been turned down.

    If more Kiwi’s/Brits/Anyone using banks here did this, they may get the hint ;) I think Kiwi’s accept the bank charges as a way of life, just because it’s always been that way.

  4. Avalon on Tue, 31st Aug 2010 10:23 am

    5. KiwiBank wouldn’t even give me a sodding credit card :( Ok – so my mortgages stand at about 1.2mil – but thats hardly the point! It’s not as if Ive ever missed a payment, and the mortgages are getting paid down – which is no mean feat with Bollard trying to cost me more money every month – arsehole!

    Deb – ASB are getting finickity (how on earth do you spell that word??) over fees. I cant get a reduction in any of the base fees – and everything else I have to get round by making my Manager do the work for me. It baffles me that its cheaper for me to make them do the work, than for me to it myself – but if they insist on being stoopid – not much I can do.

    Paola – it may be worth looking to see if you can do the same thing – or as Deb says – just tell ‘em you wont pay and see what happens. I don’t have as much negotiating power becuase of the rentals – so I don’t have the flexibility to move all my business – but if you do – its worth trying to find more ways round the fees.

    I need to set up a transaction account for the Family Trust for example – but if I do – they will charge me base fees. If I keep it as a savings account – its free – but means I need to email my manager to get her to move funds around. Its absolutely mind-boggling!

    Scot t- Ah yes – the “were great cos everyone takes Eftpos” thing. Lol. I hear that they may be changing all the Eftpos machines cos they’ve finally figured out that Europeans coming for the world cup wont be able to use their Chip and Pin credit cards in them – so we are heading (slowly – very slowly) into the 21st century.

  5. Paola Brett on Tue, 31st Aug 2010 3:59 pm

    6. Thanks Ladies, duly noted – Deborah, at the time we were purchasing our house I only had a work permit, so perhaps that contributed to Kiwibank’s refusal to grant me a mortgage and at that stage I had no idea how long my residency would take to come through, despite our UK funds which would cover the purchase if need be!
    Yup, Nationwide in NZ would be fab!

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