What’s happening with NZ interest rates?
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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And interest rates went up.
Filed under: Banks, General Budgeting, Interest Rates, Credit Cards & Mortgages in NZ
Mr Bollard did as he was told by almost everyone that he would do and put the base rate in New Zealand up to 2.75%
I wait with baited breath to see what the banks do and how much is going to cost us all. Honestly – I do!
I thought it was worth sharing some gems from the article on stuff though – because its the kind of thing that is said so often, makes no sense, and doesn’t get challenged:
“With the domestic recovery on track, we expect the RBNZ will continue to hike the OCR steadily in 25 basis point moves at each meeting, barring a substantial deterioration in New Zealand funding costs as a result of the European soverign (sic) debt crisis.”
Um Ok, my mortgage has to go up becuase of something of that happened in Greece? I don’t live in Greece – I live in New Zealand! What next – a butterfly flaps its wings in Mexico and Im declared bankrupt???
Cameron Bagrie, chief economist at ANZ New Zealand, also expects the OCR to hit 5 percent over time.
I predict that one day I will die. I wonder if I can find someone to pay me to state the blindingly obvious. Rates go up, rates go down. At some point it will hit any number of numbers. Pick one – you too can be an economist!
“Along with ongoing growth in Australia and recovery in the United States, this has so far offset weak growth in some other export markets. Against this backdrop, New Zealand’s export commodity prices have increased sharply over the past few months, boosting export incomes.”
Sorry – even I cant turn that into plain English!
But basically – the banks will probably increase the amount of money they now want off you – cos NZ money just got more expensive. The reason they didn’t drop the rates when the OCR dropped was because Overseas money was too expensive. Either way – we get screwed.
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Be careful with re-fixing your Fixed Rate Mortgages
Filed under: Banks, Interest Rates, Credit Cards & Mortgages in NZ
Oddly enough – the New Zealand banks are trying to take a chunk of your cash for the privilege of paying more interest. Gits.
Fixed rates in New Zealand are currently way too high. Floating rates are at about 5.75% with fixed rates running at about 6% for 6 months upto a whopping 8.5% for 5 years.
Usually although in theory you would need to pay a fee for re-fixing a mortgage, but this is waived. Now it seems the banks are being a lot less keen on waiving that fee.
An ASB Bank document obtained by the Herald on Sunday said it introduced the new fee schedule to “reflect the time and complexity in providing the best in customer service”.
The fees would now apply from a series of dates between March and May.
While the document shows that the cost of the fees is reducing in some cases – from $250 to $50 – brokers say the customers will have a tougher time getting fees waived.
This is something we have had with ASB for about 2 years now. They wont waive bank charges, though they are still not charging us for new loans as we re-structure our lending. But to be honest – the cost of banking with them is going up, and the service is going down. I am certainly not getting “the best in customer service”. In fact – I’m getting lousy service – I just have to pay for it now.
So you do need to be careful. And you do need to shop around. Loyalty to a bank is frankly silly – they just do not deserve it – so if you are coming up to renewal time on your mortgages – shop around and go with whoever sweetens your life the best. Bear in mind that here in New Zealand one mortgages can splint up into several parts. That can add up if you get charged the full $250 to re-fix each part of a loan.
The only customers not having to pay fees for refixing a mortgage were those referred to as a “high value clients”.
The bank said in the document that fees were required by law to be “fair” and represent the cost of handling a loan. It said the fees were changing to “fairly reflect the time and resources we allocate to client interactions”.
The document also showed the ASB Bank was wiping a $500 contribution previously given to customers to help pay for legal fees.
Well, I’m certainly a “High Value Client” at ASB, but they still don’t give a damn. I have however managed to get them to reimburse us some legal fees that we have incurred because their loans department keeps stuffing up. So much for paying for service huh?
So be careful. Shop around, and make sure that paying off your mortgage is a high priority. That’s the one thing that will give you leeway to make your own choices and switch banks. Although the recession is basically over – the fallout from it could last years. The place we see that most is in the cost of mortgages and the unwillingness of banks to lend money to people who need it. Having small mortgages means the banks love you because you are a low risk to them. That’s a good position to be in!
Thanks to Christine for the heads-up!
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Bank Guarantees on loans
Filed under: Banks, Interest Rates, Credit Cards & Mortgages in NZ
When you take out a mortgage to buy your home, the mortgage is “secured” against the house. Most people get that, and understand it – it’s the bit that says “You can lose your home if you do not keep up the repayments on your loan” sort of thing.
But on top of that – you also get what is called a Personal Guarantee. Which says that even if we take your home, and you find some nifty way to try and get round paying us what you owe us, you personally guarantee that you will pay us what we want – even if its 20 times what your house was worth. Or something to that effect. Strangely enough its a nightmare of small-print and legal waffle.
And it’s the bit we seem to have no end of problems with in our dealings with ASB. I dread trying to organise mortgages with them now, because I can almost “guarantee” that there is gonna be a problem with the Guarantees.
We have yet another problem with them right because Ive actually paid off one of my mortgages.
Which is obviously a bit of a big thing for me. (Blog will be here as soon as I have the statement to copy and prove it!) It seems the ASB loan department have finally looked through the file, and worked out that one of the trustees in our Family Trust changed about 3 years ago. They were told, but it looks like everyone ignored it. Now they want us to sign another guarantee to replace that one.
For a loan that we have paid off.
Bloodsuckers!
So, as I am already a bit disgruntled with the loans people for screwing us around a few weeks ago, Ive said I wouldn’t do it unless they covered the legal costs – as Lawyers are needed (they are the trustees that changed). ASB have agreed to pay $250.00, so I’m instructing the solicitors that if it takes more than that, they need to stop working on it and tell me. I’m not paying for another bank stuff-up. They wont reduce my bank fees, so I’m not in the mood to indulge them right now.
I’ve also said that I need it in writing that the old guarantee is canceled, and that they are only wanting us to guarantee the amount of the outstanding loan – a rather large $210,000.00 less than the original guarantee.
Banks will try and sneak in a silly amount, but you can tell them to make the guarantee for the size of the loan only – it will have a clause in there that they can come after you for any associated costs and interest anyway.
I wait with baited breath to see what they will do.
One of the things to note about this situation, is that you may be advised to set up a family trust when you come to New Zealand. Usually on the premise that it protects your assets such as your home. But then the bank makes you sign these guarantees, and they bypass the whole family trust anyway. SO don’t be fooled. We are happy to have a family trust, because we have a business and investments, and it will to some extent protect the home my parents and brother live in if we stuff up. But every business loan we have has one attached, so if you go belly-up, the banks can come after us – there no hiding.
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Argghhh – Banks (again).
I dream of one day waking up and finding out that the people in charge of my banks in New Zealand actually look at their customers accounts and business before making blanket decisions.
It would be nice – just once – to be treated by a financial institution as if I was something more than the dirt beneath their feet.
Today’s frustrations comes from finding out that I have lost my Interest rate discount on my personal Revolving Credit mortgage. Of course – the bank didn’t bother to tell me this – that would be proactive and customer focused. Instead I found it out while doing my accounts and balancing my statements.
So I contacted my Personal Relationship Manager – who I have to say is exceedingly good, and I have absolutely no complaints about – to ask for it to be restored.
Except – as always – there’s some faceless ninny in a back office who says “no”. Faceless ninny of course doesn’t have to front up to pissed off customers – but hides in the back office and lets someone else take the heat for their stupidity.
So here’s the thing that makes said person in back office a complete moron.
I hardly ever pay interest on that account anyway. In fact last year –out of 12 months – I paid interest on only 3 months – most of the time the bank had to pay me because I was in credit. Things have been tight this year – so I have had to pay a little bit.
$429.60.
Since April.
My rate is 5.75, but with the discount would be 5.5%.
What this means is that over the same period – I would have paid $410.92. (Ha – see school maths and simultaneous equations really does come in handy every so often).
Now it would be worth the bank perhaps not giving a discount on a mortgage where someone pays a lot of interest – our original interest charges were nearly $1000 a month. But in this case – for the sake of $18.68 they have hacked me off, and I’ve written a blog about them.
And I’m about to pull my life and income protection business off them as a reward. That’s $220 a month in premiums down the toilet.
Never think you cant do something to get the banks back if they treat you like garbage. There are ways – and we can vote with our feet. It might be difficult with banks as they all seem hell-bent on trying the be as crap as each other – but hey – we can still try.
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Avalon’s Money Thread – should I pay off my home loan as fast as possible?
I have always thought that paying your mortgage off as quickly as possible is a ‘given’. Not according to these guy’s. That did worry us.
I actually heard a rather good explanation of this from the ASB advisor. I had always thought that getting the mortgage off your back was to be our first priority, and for many people it may still be the best option so I wouldn’t discount it out of hand. That really depends as far as I can see on your personal circumstances, finances, and how good you are with money. I fully believed in this principle when I came here purely from reading the Anita Bell books. I had never really appreciated just how much money you actually pay for a house when you take into account the interest payments over 25years.
Our house cost $595k to buy. But over 20 years taking a 265K mortgage will add 269K to the cost so it will actually have cost us $864k to buy! Interestingly – if you are me anyway – by paying fortnightly for the whole 20 years we save a whopping $53,000 on the cost of our house- that’s a whole lotta coffee!
15142 cups to be precise
However where the advisors are coming from is that if you pay off your mortgage and only do that, you still have no savings with which to live on, so you still have to work to earn an income. Whereas if you were to save / invest at the same time as overpaying a bit on your mortgage you get rid of the debt earlier (and save money on interest charges) but you also have money set aside that you can now live on (or investments that generate an income). That’s the idea anyway!
Hi, everyone, pardon me if I’m asking a silly question but from reading the forum, I have this feeling that most people take up mortgage loan of about $200K to purchase a house, even though they may have the spare cash. Can anyone enlighten me on the reason for such arrangement?
Well, I can’t exactly answer that as for a start if I had $200k in cash hanging around – I would have used it to buy the house instead of taking a mortgage. However – there are 2 theories that could explain at least why some people would do it.
Firstly – revolving credit mortgages are popular here. We have one of these, and part of our mortgage is on this scheme. (About $100k) Now we didn’t actually need the whole 100k, as we have some extra savings, so at the moment only about 60k of that is being used. A revolving credit facility is like a big (huge) overdraft limit. So in our case we have an overdraft limit of 100k, but the balance is only about 60k overdrawn. There are 2 reasons that we have done this:
(1) we don’t pay interest on the portion of the “mortgage” that we don’t use, we only pay it on the 60k,
(2) If we need that money in a hurry we don’t have to ask the bank for a new loan, it’s already “approved” and that money is available at mortgage rates (though please see post on revolving mortgages for why you need to be very careful of doing this).
The other thing that we do that goes against the “get rid of the mortgage fast” is that we are saving to invest alongside paying extra on the mortgage. This money will be used to buy shares to start with and this was a really big thing to get my head round. It’s all very well having no mortgage but do you have any money to live on as well. My parents are a good example of this. They have used $200k to buy a stake in our house. With our money, and our mortgage plus their 200k, we bought 1 big house. They have the money to get rid of at least a huge chunk of our mortgage but they would have nothing to live on (as they have very little income).
Something else I did remember if you are buying now, the exchange rate is very poor (2.5 @ time of writing*), and in some cases it may actually be better to leave some money in the UK, pay an NZ mortgage and then bring the cash over when the rate improves. I can’t remember the numbers, but we worked out that if the exchange rate £-$ went up to 2.85, it would be worth us leaving money in the UK for up to 2 years.
* Oh for the days of an exchance rate of 2.5! Its 2.2 today – and thats up a bit.
Avalon’s Money Thread is a series of posts which were originally written in 2007 for an Immigration Forum. They came about by answering questions that forum members asked, about how to cope with the often difficult financial situation they face in New Zealand. They formed the basis of what was eventually to become the book Avalon’s Guide: after another year or so of drinking way too much coffee and finding out way more about taxes, money and investing that any sane person should.
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Avalon’s Money Thread: Revolving Credit Mortgages.
These are sometimes called Line Of Credit (LOC) mortgages, and are very common here. They are most like the One Account in the UK, in that it’s a mortgage and current account rolled into one. Basically it’s a current account with a whopping great overdraft. The benefit is that if you get paid your salary directly into it, it can reduce the amount of interest you pay on the loan.
However there are some serious downsides especially if you are not too good at looking after your money. They are notorious for not getting paid off, as it’s all too easy to keep dipping into for buying cars, boats, shoes or coffee.
Also, because they are usually a few % more than fixed rate mortgages – you need to have a certain amount in there at all times to offset the higher interest rate. There’s actually a calculation you can do to work out how much of a balance you need to keep in.
I would say if you are thinking of a revolving credit account you do need to be very good with organizing your money, as it’s all too easy to end up with the OD limit never going down. So you never pay off that part of the mortgage. Some banks have these types of accounts where they do drop the limit each month so if you wanted one, but feel concerned look for that. Otherwise the way I deal with is:
I use Quicken to run my accounts at home. Doesn’t really matter how you do it but have some way of keeping track of your mortgage (don’t rely on the bank to tell you). In Quicken I have set up a “savings goal” and each month I move money into it. This is always the amount of money I “should” have paid on the mortgage if it was a normal one, minus the interest for that month. So for example: I should pay a total on $902 a month for a $100k mortgage at 9.05%. My interest for the month is around $300, so I pay $602 into the savings pot. When I have $5000 in there, I “move it back out” and ask the bank to reduce the overdraft limit by $5000. I have then paid off 5k. I know this may sound weird because the savings pot only exists in Quicken or on a spreadsheet, but it works.
You also really need a credit card. By putting as much on the credit card as possible, you keep the balance in the revolving credit account as high as possible for as long as possible. But always make sure you know exactly how much you can spend on the credit card without getting into trouble. For this to work well, and not get into debt you need to be able to pay off the CC each month in full. If you don’t think you can do that then it may not be a good idea to have this kind of mortgage. Do not use the CC for buying consumer items that you do not have the money for. That way lays ever-increasing mortgage debt. Maybe just have a very small limit on the credit card. You need the equivalent of 2 months spending as a minimum limit.
Avalon’s Money Thread is a series of posts which were originally written in 2007 for an Immigration Forum. They came about by answering questions that forum members asked, about how to cope with the often difficult financial situation they face in New Zealand. They formed the basis of what was eventually to become the book Avalon’s Guide: after another year or so of drinking way too much coffee and finding out way more about taxes, money and investing that any sane person should.
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Avalon’s Money Thread: Can I get a decent affordable mortgage?
Filed under: Avalon's Money Thread, Interest Rates, Credit Cards & Mortgages in NZ
I’m a sick puppy; I think mortgages are really interesting once you understand how they work! The Anita Bell Mortgage book is really the best thing there is for explaining it all (Other than my book of course) and reading that will put you streets ahead when you have to go asking banks for shed loads of money to buy your own piece of beachfront New Zealand.
Firstly it’s always worth negotiating with the banks over your mortgage. The more you need to borrow the more clout you have, so don’t be shy. The worst that can happen is they say no and they may well say yes!
I got 0.5% off my variable rate on the Revolving Credit mortgage (that’s the ASB orbit account) and I also negotiated a refund on the monthly fee of $10 but forgot to negotiate a refund on ALL fees, so I do still have to pay $2.00 a time to set up automatic or bill payments I’m currently paying 9.05% instead of 9.55%, that’s on a mortgage of $100k. This is variable so goes up and down as the bank rate changes, but I stay 0.5% below the advertised ASB rate at all times.
I got 0.25% of the 2 year fixed rate so I’m paying 7.42% instead of 7.67% that’s on $165K.
Note: Current rates are 6.4% on the variable rate and 5.42% on the fixed rate mortgage. As discussed before here, we have also reduced the level of the mortgage by over $120,000 by using the tricks we learned.
I also got an agreement to refund all fees payable on my parents and brothers NZ accounts, up to $20 a month on each account.
AND – I got my first year Credit card fees removed, as well as the fee for joining the Credit card reward program. All in all, over the first two years, it is saving quite a packet.
A lot of what reductions you can get depends on the numbers – $265k mortgage is quite high. But my top tip, even if you aren’t looking at anywhere near that much is: shop around and TALK to the mortgage managers. I had 6-7 meetings with the guy at ASB; asking loads of questions about how things work in NZ. I also knew what I wanted to do to save money because I have read Anita Bells books on the subject a few times I built up quite a relationship with the guy before we ever signed on the line!
If anyone is patronising, or doesn’t give you the time of day, walk and go to the next bank or even another branch of the same bank. With ANZ I never got further than a first meeting with for this reason, that and they will give a measly 0.1% discount on the rate and charge you for it! Westpac nearly got my banking business, except when I was passed on to the “personal Relationship manager” and he was utterly obnoxious! Patronising and arrogant and he spoke to me as if I was 12 years old with a piggy bank! Bear in mind at this point I was well on the way to getting my finances sorted, had budgeted till I was blue in the face and could tell exactly what I had in the bank to the cent. I was not a happy bunny.
One thing I would suggest is ask every bank for quotes, and ask then them all to negotiate. I rapidly took two banks off my list because they wouldn’t move on rates (ANZ and HSBC). You will rapidly get to know what the deal is and get a feel for the best way to structure the mortgage.
The main options for mortgages are:
Fixed Rate Mortgages (fixed for 6 months up to 5 years – some now for up to 10 years)
Flexible rate Mortgages (your bog-standard old fashioned normal type mortgage)
Revolving credit accounts. (See below)
Be aware that you can split your mortgage into chunks, fixing some for different lengths of time, having some on a normal flexible mortgage, or some on a “Revolving Credit” (See next note). This is something I found really bizarre, because we just don’t have this in the UK. But to be honest I really like it. I just split mine into 2, but I’m due to look at it again in July07 and I’m thinking of doing a three way split: some on Revolving, a 1yr fixed rate, and a 2 yr fixed rate. It means you have a bit more flexibility to work with interest rate changes, and by splitting the mortgage up you can pay off your mortgage faster by making the overall interest rate lower.
QUOTE: Paying fortnightly instead of monthly is a very smart way to reduce mortgage costs.
Too right! We don’t do this because of the way we have ours set up it actually doesn’t give us an advantage. With a revolving mortgage often at a higher interest rate, you need to keep all your pennies in that account as long as possible. If you don’t have one of them, fortnightly is better.
If you use the “fine tune your loan” calculator on Westpac It will show you exactly how much money you can save between a monthly mortgage and splitting the amount in half and paying that fortnightly. Plug in the numbers for a monthly mortgage and hit calculate. That tells you the monthly payments and how much interest you pay overall. Under “Change payment frequency” – click option [a] (half monthly amount paid fortnightly) and hit recalculate. It then tells in nice friendly red letters just how much you save overall and how much time you just knocked off your mortgage. If that doesn’t make Mortgages interesting – nothing will.
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Avalon’s Money Thread: Banks and Bank Charges.
I have to make clear at the outset that I do not accept that bank charges are fair at all. I know all the reasons: how can I possibly expect the bank to work for free; they aren’t a charity etc, but banks make enough money out of us as it is and they don’t need to make any more. You don’t pay Whitcoulls $5 a month for the privilege of being able to go in and buy a book – so why should you pay the banks to hold on to your money. They make money by investing your savings, or charging you higher rates of interest than they pay, when they lend you money.
I utterly object to being charged to spend my money. I don’t care what they charge or why they do it, it’s not their money, its mine! It’s a principle thing and at the end of the day no amount of justification for charges actually diminishes my principles.
Bank fees in New Zealand are ludicrous and applied for the most spurious of reasons. ASB will charge you for having to ask their permission to spend your money! (The netcode release fee is a charge applied if you wish to spend over $500 over the Internet. This is for “security”. (Theirs not ours by the way – and yes – having a hubby who works in IT Security – I do indeed get the inside track on just how much we are being expolited by the banks on this issue). Apparently the banks got stung by fraud and so introduced net code. OK we all need security but I have never had to ask permission to spend my money, not even when I was 5. As it’s for their benefit though, why do I have to pay? The online spending limit used to be $2500, but due to a phishing attack I now cannot spend over $500 via the Internet without permission.
As others have said, you can get round this. Everything in the New Zealand banking system seems to be negotiable, especially once you have a mortgage or an account with $50k in. There’s nothing to stop you asking your current bank to match the best offer you can get elsewhere, we did this with our mortgage.
Note: Nogotiating with the banks is a lot tougher right at the moment, but as with everything – once the “resession” is over – the banks will come round and be more ameniable.
You can wangle your way round fees, especially service fees such as getting bank cheques and moving large sums of money for bills etc if you get a good “Personal Relationship Manager”. If you cannot do this, careful use of the system can minimise fees even if you can’t stop them.
Firstly be aware that getting small amounts of cash from an ATM is EXPENSIVE. You can get charged upto 50c each time. So when you get cash, get amounts that make it worth it. It always cheaper to get cash back at the supermarket paying usually only 20c. Never get cash from another bank ATM on top of the 50c charge, you get another 50c charge and it really adds up. (Do that 7 times – that’s a cappuccino ) Decide how you handle cash, its different for everyone, but we now use cash much more than we did in the UK, where we thought nothing of using switch (eftpos) for sums as small as £5, now we have a minimum we allow of $25.
(Currently becuase we have a Mortgage account – we dont actually get charged anything for taking cash out – it’s included in our monthly “base fee” which is now non-negotiable!)
It is worth being aware that fee free banking is finally coming to NZ. It’s been here a while with the proviso that you keep minimum balances, often $3k-5k. Now some of the banks are offering no transaction fees on their current accounts. In some cases you can get no monthly base fee by opting out of being sent paper statements. I’m not so keen on that idea, but that’s because for me the statement arriving tells me its time to balance my accounts. You have always been able to negotiate your fees here, but it has tended to rely on having a lot of business with the bank (savings or mortgage or business accounts), but this change means the fee free banking is open to more people not just those of us with a fair amount of money tied up with the bank.
Current ASB charges:
Streamline account:
$3 a month base fee (waived if you have “Statement Stopper”)
$1 a month for a netcode token
25c each day you use Netcode
$2 to set up an automatic payment or bill payee.
Fastcheque is now free.
Their credit cards cost from $12 – $40 each every 6 months, and their credit card reward program costs $10 each for 6 months. Why they shoudl charge you to join the rewards program is beyond me – anything for a fast buck I guess!
Avalon’s Money Thread is a series of posts which were originally written in 2007 for an Immigration Forum. They came about by answering questions that forum members asked, about how to cope with the often difficult financial situation they face in New Zealand. They formed the basis of what was eventually to become the book Avalon’s Guide: after another year or so of drinking way too much coffee and finding out way more about taxes, money and investing that any sane person should.
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Are Kiwis really obsessed with Property?
Err – no.
But it makes a good headline doesn’t it?
There have been two articles that talk about this recently – both contradict each other – no surprise there – articles usually do that.
In today’s article, it seems that a group of concerned people have addressed a group of concerned politicians (uh oh) and told them that we are about to “lose our sovereignty to Australia” if we don’t stop buying houses. Seriously. And some of these people get paid a lot of money to write such tripe. I mean – how can buying houses possible mean we are about to get taken over by the Aussies – and why the hell would they want to take us over anyway?
Now basically – all this is to do with looking at why the Banks won’t pass on the drops in the official interest rate. I thought it was just because they wanted to screw us for more money – but the boffins think its all the fault of the Property Buyers. So watch out – you might not want to buy your own home and a Bach when you move here – you will be blamed for us becoming an Australian Territory.
Of course – the people they are really blaming is people like me – dastardly, evil, greedy Property Investors – who apparently according to said boffins are “using the credit card to pay the mortgage”. Like hell I am mate! Our mortgages are paid for out of our hard earned salary and a bit of rent. Speak for yourself – don’t speak for me!
So – exactly how many Kiwis own investment properties? Why is there such a rush to insist that the recession is all our fault? That the New Zealand economy is collapsing because every Kiwi owns a gazillion houses and we need to invest in shares (New Zealand shares of course) instead?
7%
That’s right – a whopping 7% of kiwis own rental property, and most of those (about 90%) own just one or two rentals. Leaving about 0.7% (ish) of the Kiwi Population that are “professional investors”.
Scarily – that includes us with our huge portfolio of 3 (yes three) rentals. When we settle on the two off-plan rentals we have purchased – you will have to hang us from the gallows. I had a rather “wow” moment while chatting about insurances with my broker when he said that we had “Lots of rentals”. I don’t think I’ve even got started yet. We are piffling compared to a lot of people I know.
The other article that I thought was actually really good puts this in perspective was looking at words of wisdom from Andrew King and Lisa Dudson, both well respected people in the property world over here.
They talk about the basics of property investing – that funnily enough you do have to do some work, and you do need to look after your tenants and not house them in a flea pit. (While looking at properties to buy – I have seen things that would have the owners in jail if animals had to live in them – but humans get charged rent for the privilege).
Lisa Dudson says “Patience aside, making a profit in property takes sound planning, strategy, wise counsel and firm financial foundations.”
I know I’m only just really starting out with property investing – but that’s pretty much how we do it. We get people to help us, we have a plan, we know what we are looking for and what we want to achieve, and we still keep control of our spending. I can honestly say that it ain’t me that’s overspending on credit! (Well apart from the recent splurge on the 46″ Sony TV and Sound System – but I had saved up for that so even though it went on the card – the bill got paid immediately). My coffee habit is also affordable – so that is not going to cause the immediate take over of New Zealand by the Australians either I’ll have you know!
Whether or not you join the Kiwi Non- Obsession when you get here and invest in property – make it your choice and don’t be bullied by what other people think is right for you, and don’t be bullied into not doing it becuase there are so many people at it and you will be responsible for the end of civilisation as we know it. Get lots of advice and get help – an remember that buying houses in New Zealand is not at straightforward as many people would like you to think, and you need to understand the tax laws.
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