Well Done to ASB
Filed under: Banks, Interest Rates, Credit Cards & Mortgages in NZ
It’s really nice to be able to say that a Bank has done something really worthwhile but I think ASB deserve a gold star for doing just a little more to help people in Christchurch, and show a bit of team spirit and flexibility.
We realise that some ASB customers have been significantly affected by the Christchurch earthquakes so we have updated our assistance package to reflect this. If your home is uninhabitable or your income has been significantly impacted talk to us as you may be eligible for the following discounted rates on your existing products:
Home Loans
Save on your home loan rates for up to 12 months
We’re offering up to 12 months at a reduced rate to help make things easier. That means 0.5% discount off your existing fixed rate; and/or 1% discount off your floating rate.
Up to 6 months payment holiday on a home loan
Take a break from repayments (although interest will be added to your loan during this period increasing what you owe).
No Early Repayment Fees if you repay a fixed rate home loan, where a home is destroyed or suffered major damage as a result of the earthquake.
No establishment or adjustment fees if you need to establish or restructure a home loan as a result of the earthquake.
Credit Cards
A discounted rate of 6.24%p.a. on your ASB Credit Card for 12 months. This rate is subject to change.
Immediate consideration of any requests for emergency credit limit increases and review of credit card instalment repayments
Personal Loans
Up to six months payment holiday and a discounted interest rate for existing Personal Loans for 12 months. This is set at the current housing variable rate.
Term Investments
Access to funds in ASB Term Deposit or ASB Term Fund accounts without receiving a reduced return on your ASB Term Deposit or paying any ASB Term Fund withdrawal fees.
Insurance
Our support if you’re working with IAG on claims over and above the Earthquake Commission cover.
All Christchurch customers are also eligible for a 90-day emergency overdraft facility
Borrow up to $10,000 if you have a home loan (or $2,000 if not) at a special variable rate of 1.25% p.a. below ASB’s housing variable rate. Right now that special rate is 4.5% p.a.
These discounts are actually quite significant. To help put that in context, I recently had to negotiate damn hard to get a 0.1% discount of my floating rate mortgages, and my fixed rate (only one of those with ASB) is still fixed with no discount.
And the no early repayment fee can literally save tens of thousands of dollars.
ASB have similar offers in place for businesses affected by the Quake, and this is in addition to the emergency package that they set up, along with the other banks, immediately after the quake:
ASB Christchurch Business Rebuild Fund
We’ve set up a $100 million fund for ASB SME business customers with existing loans that have been substantially impacted by the earthquake.
The fund will offer a 12 month interest free period, followed by a discount of 1.00% off your rate(s) (fixed or floating) at that time for up to two years.
Principal repayments are not required during the first 12 months.
The offer is available until 31 August 2011.
To ask about any of these options, or just chat about your situation and how we can help, please call us on 0800 272 222 between 8am to 5pm Monday to Friday.
Lending criteria applies. Interest rates subject to change. ASB terms and conditions apply.
ASB Christchurch New Business Fund
We’ve set up a $100 million fund to encourage new business in the Christchurch region.
This fund is available for both existing small to medium business customers and new businesses whose future cash flows are expected to be financially viable within 12-24 months.
A maximum amount of $1 million business lending per customer.
The fund will offer a 12 month interest free period, followed by two years at 1.00% discount on customer rate for two year fixed rate and variable rate Term Loans and Overdrafts.
Principal repayments are not required during the first 12 months.
The offer is available until 31 March 2012.
I mean – Interest free loans for up to a year? I cannot tell you how mindblowing this is in New Zealand. This is not a place that ever took up the idea of 0% on credit card transfers (though ANZ are offering 2.99% at the moment).
Im really impressed – and let’s be honest here – it takes and awful lot for me to impressed with a bank. I am assuming that the other banks will follow their lead – but ASB got there first, and they get the credit.
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Are house prices in New Zealand really too high?
Filed under: Cost of living, Economics, General Budgeting, Interest Rates, Credit Cards & Mortgages in NZ
Or are people just wanting a Rolls Royce on a Mini Cooper budget?
Auckland first-home buyers Chelsea and David Yandell ended up paying more for their Onehunga place than they initially expected when they started out as house-hunters.
Now, they have a three-decade mortgage. “We realised that paying $350,000 in Auckland, you’d get something that was pretty crappy,” recalls Chelsea of the buying experience. So they changed their expectations and borrowed more.
“The house we bought has been finished to a high standard. It’s perfect. When we were looking, we realised we’d have to spend more. We had a look around for a few months and we had our hearts set on a couple of houses. But the places we were looking at would not have gone up in value. It wasn’t what we wanted.
“House prices are definitely too high and wages are too low for first-home buyers. We’ll be 55 by the time we pay off the 30-year mortgage. But we didn’t want to keep renting. That’s dead money. … We are now more careful with our money and set goals. If we pay a certain amount off the mortgage, we can get new blinds. We’re with KiwiSaver so we know in retirement, we will have something more than the house.”
Sorry – but there is absolutley sod all in this article that suggests that house prices are too high. Now they may in fact be too high – but not because you want a house that’s finished to a high standard. That’s just you wanting a better house than you can afford. What annoys me about this is the amount of times we get blamed for this because we are property investors, and thus automatically we are greedy. But surely the greed is in wanting something you cannot afford?
It is not the fault of high prices that these people have a 30 year mortgage – it’s that the houses they were prepared to buy could only be theirs if they took on more debt than they could manage in less than that time. That is entirely down to them, and thus their own fault.
My first house cost £84,000. I imagine that these two would have turned thier noses up at it instantly. It was old (1700′s – and 1960′s) tiny (two beds) a crappy kitchen, a coal fired stove as the only heating and it didnt work properly, and had the most disgusting wall coverings you have seen in your life, and carpets that wouldn’t have looked out of place in a crap pub. And an avocado bathroom suite! Almost all our furniture was handed down to us from other family.
But it was a great home – and when we got it done up it was a lot better than when we started. It was ours, and we could afford the mortgage on it. Im sure we could have borrowed more and got a “nicer” house – and then bleated about how much that perfect house was and how awful it was that we had to pay so much for it. And when I was going through a divorce, I could still afford the mortgage on it becuase I had not been greedy and bought a house that we could not afford becuase I wanted something “perfect” for my first home at the age of 25!
Doing that means that at the age of 35(ish) when we came to NZ we COULD afford the nice house in the country, with stunning views and a swimming pool. I would love to have had this at their age – I just wasn’t that daft – and I sure as hell didnt expect house prices to stay low just so I wouldnt have to bother climbing the property ladder.
I also always wonder what these people will do when they come to sell? Because at the end of the day, house prices are actually determined by two things: what the buyer will pay, and what the seller will accept. Human nature dictates that we complain that prices are too high when we are trying to buy – but refuse to accept “insulting” offers when we sell. We become the problem we just complained about.
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Christmas pressie from the Reserve Bank
Filed under: Cost of living, Economics, Interest Rates, Credit Cards & Mortgages in NZ, Property & General Investing
Alan Bollard (bless his little cotton socks) has decided that the base interest rate in New Zealand is not going up this month.
“Interest rates are now projected to rise to a more limited extent over the next two years than signalled in September.
Oh Yay! Just in time for my investment mortgages to come off their fixed rates – and there was me thinking that I might have a snowballs chance in hell of reducing my mortgage payments.
Of course the reason for the hold is becuase no one has any money to spend, so the economy isn’t taking off as well as it should. I’m not sure where anyone expects us to get money to spend from right now – prices are still going up and wages aren’t. And to be honest, even if I had any money – what he’s saying is that If I spend it and “help the economy” hes going to put my interest rates up as a result.
Does this make any sense to anyone?
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NZ interests rate holds at 3%
Filed under: Cost of living, Economics, General Budgeting, Interest Rates, Credit Cards & Mortgages in NZ
Alan Bollard (bless his little cotton socks), has held the official cash rate at 3% this morning. There are reasons for this – which basically comes down to we aren’t spending enough, so he has to keep it low. If we were spending he’s have to put it up to stop us.
Well, I’m doing my bit right now to ensure it doesn’t go up!
Overall, continued economic growth was expected to gradually absorb current surplus capacity over the next few years, Dr Bollard said.
Headline inflation was expected to move higher following the recent increase in the rate of GST.
The subdued state of domestic demand suggested this inflation spike would have limited impact on medium-term inflation expectations.
Translated as:
I can hear you talking but all I hear is “Blah Blah Blah”
If this is going to affect mortgage rates, we wont see it for a day or so, but I happened to be checking last week, and compared to a year ago, ASB’s rates are down quite nicely for longer term loans, but up for floating or short term loans. Still way too sodding expensive in my opinion – but ho hum.
As at 05:14:15 p.m., Sunday 20 December 2009
Housing Variable 5.75 % p.a.
Housing Fixed (6 Month) 6.00 % p.a.
Housing Fixed (12 Month) 6.25 % p.a.
Housing Fixed (18 Month) 6.75 % p.a.
Housing Fixed (24 Month) 7.25 % p.a.
Housing Fixed (36 Month) 8.00 % p.a.
Housing Fixed (48 Month) 8.50 % p.a.
Housing Fixed (60 Month) 8.75 % p.a.
ORBIT Home Loan 5.75 % p.a.
As at 09:27:19 a.m., Tuesday 19 October 2010
Housing Variable 6.25 % p.a.
Housing Fixed (6 Month) 6.35 % p.a.
Housing Fixed (12 Month) 6.45 % p.a.
Housing Fixed (18 Month) 6.60 % p.a.
Housing Fixed (24 Month) 6.70 % p.a.
Housing Fixed (36 Month) 7.10 % p.a.
Housing Fixed (48 Month) 7.45 % p.a.
Housing Fixed (60 Month) 7.75 % p.a.
ORBIT Home Loan 6.25 % p.a.
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ANZ saved the day :)
Filed under: Banks, Interest Rates, Credit Cards & Mortgages in NZ, Property & General Investing
After getting really irritated with Westpac for being a bunch of inflexible overcharging scumbags – I was actually quite concerned about speaking to our other Investment Property bank about paying a small amount of the mortgage. I kinda felt that if I met any further obstinacy I was likely to spew. Or gnash my teeth so much I’d give myself a stonking headache.
So I popped into an ANZ branch to speak to someone and ask the same question: Can I use some of this money that ends up sitting in the transaction account – to pay down the mortgage.
Apparently I can.
There is a limit of 5% of the balance per year, or $10,000 which ever is greater – after which you pay break fees. Now I’m OK with that to be honest – these would always be the last mortgages I would choose to pay large sums off, because the interest is a business expense and therefore deductible. If I had $10k rattling around – it would be paying off our personal mortgage, which still has $55,000 to go on it. I had figured when we bought the rentals that I would be highly unlikely to want to pay down anything substantial on these two mortgages for at least 5 years – if ever.
(Note: Mortgages on investment properties are treated differently to personal mortgages – you don’t necessarily need or want to pay off the mortgage, depending on how much risk you are comfy with and what your long term plans are. Whereas there are just no benefits to having a personal mortgage that I could possibly think of. Unless you are the Bank’s side of the equation – it’s really rather cushy for them!)
So, the $600 sitting in Westpac has been removed and transfered to our ANZ transaction account, and that gives me $1100 to pay off the ANZ mortgage.
It won’t save me much money in interest payments (about $2 a week) , but at this point its taking me a tiny step in the direction I want to go in. And I guess it’s always better to be going where you want to go, than where the bank wants you to go.
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Why you shouldn’t get a mortgage from WestPac
Filed under: Banks, General Budgeting, Interest Rates, Credit Cards & Mortgages in NZ, Property & General Investing
(Prefaced by saying that they still have the best mortgage calculator I’ve seen – so they ain’t all bad).
Today’s issue comes to you courtesy of Westpac’s draconian break fees – the sledgehammer they whack you on the noggin with for daring to want to pay down some of your mortgage.
Ive asked my banks for break fees before, because i wanted to re-arrange my mortgages when the interest rates started dropping. Westpac at the time were trying to charge way more than our other banks.
Today I have asked if I can use just $600 which is sitting in a Westpac transaction account to pay down one of my investment mortgages. Now the money is only sitting there cos Westpac, like all NZ banks, refuse to take a direct debit from my ASB Business account to pay the mortgage, so I have to set up an automatic payment and pay the funds into a Westpac account that I neither want nor need. But because they refuse to do Direct Debits, and also refuse to work out a standard monthly interest payment, I have to ensure that enough money is transfered to always be able to pay for a 31 day month, which means that over time, the excess paid in a 3o day or 28/29 day month builds up.
Now usually when it gets to about this amount, I transfer the funds back to ASB, where I can actually use it. This month, I decided that rather than doing that, I would like to actually pay these small amounts off the mortgage. It’s my Highest interest rate, it also has the highest Loan to Value Ration (LVR) of any of our mortgages – in fact it’s about 100% of the current value of that property. So for many reasons its actually not a bad idea to pay even a little off that one. So how much are they gonna charge me to pay them $600?
$151.77 
Yep – an eye watering 25% of the amount I actually want to pay off the mortgage. Seems theres not even the option to pay off upto 10% a year from your fixed rate mortgage, which most banks allow.
Now to be fair – I do need to take some responsibility here – I signed the mortgage papers without understanding this – and I didn’t make it clear to my broker (That I remember anyway) that I expect to be able to pay a certain amount off a fixed rate mortgage each year without penalty. On saying that – I do feel mortgage brokers should include this automatically for you anyway. They are supposed to be looking out for our best interests, and I think this is something that should be included as a matter of course.
Now, I’ve looked back at some old blogs Ive written on this topic – and there is supposed to have been an investigation into ridiculous break fees charged by New Zealand banks. And Phil Goff, the leader of the Labour party called for banks to be more flexible. But it seems sod all has happened.
Be warned: Westpac have draconian and inflexible charges if you want to pay even a cent off a Fixed Rate mortgage. The fees are unreasonable, and the bank is known to be inflexible if you start having problems – which is beyond stupid. I happen to know that rather than helping some people by altering the terms or rates on some mortgages, Westpac forced 2 mortgagee sales and lost a staggering $350,000 on the sale of those properties in the block our investment is in. A decision which directly affected the Value of our own apartment, which is what makes our LVR on that so high.
I absolutely recommend you never get a mortgage with Westpac! Ever!
If anything goes wrong – they won’t give an inch, and will lose hundreds of thousands of dollars rather than help you out. As much as I might dislike ASB charging me fees – I will never move banks because they still let me actually manage my mortgages – certainly Westpac don’t. I have asked my new manger (I think I’m on my 6th one in three and a half years – they seem to get through staff like a case of the runs) if someone can try and be flexible over this – we will see if I get anywhere.
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The problem with buying Leasehold properties
Leasehold properties are cheaper than Freehold properties – which makes them look like a bargain. (Well sometimes – you can see leasehold properties for sale at freehold prices!) But theres a reason for that – you don’t own the land – you just own the building on it. Someone else owns the land, and charges you rent for the privilege of owning the house on it.
Like Hawkes Bay Regional Council, whose leases are coming up for renewal, and so they have hiked the prices up.
One week Niki Willis was paying $27 a week ground rent on her leasehold home in Napier, the next she was paying $172.
Now that’s one helluva hike in your weekly budget. And bear in mind this is on top of any mortgage your may have to pay.
The council, which owns about 1000 residential leasehold properties in Napier with a total book value of $85 million, realises many leaseholders are finding themselves in impossible situations when their ground rent is reviewed at the end of the 21-year term
Thats the bit to be aware of: how long is your lease for, and when are the rent reviews allowed. 999 years with no rent review till the end – possibly worth thinking about, but a rent review every four or five years and you could be in serious trouble.
And the worst thing is: not many people are willing to buy leasehold land. I know I wont touch it with a bargepole – so straight away you cot your chances of selling for a good price. Hey – thats why its cheap if you want to buy it yourself.
Many of the new apartments going up in Wellington along the waterfront are Leasehold.
Added to this in New Zealand is that some of the leases are owned by Maori Iwi and you could possibly have issues with any claims under the Waitangi Agreement. SO if you are thinking of buying Leasehold, especially in New Zealand – please take care. Make sure a lawyer goes through all the ups and downs with a fine toothed comb – then at least you fully know what you are taking on.
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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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How much did we save on our mortgage exactly?
Filed under: Banks, General Budgeting, Interest Rates, Credit Cards & Mortgages in NZ
On the 8th February, we paid of one of our personal mortgages. It’s taken me this long to be able to blog about it because ASB wouldn’t send me the closing statements, and as soon as it was paid off (as in about 2 seconds later) the whole shebang disappeared off my internet banking. So I had no way of working out the numbers, or indeed proving that I had done it.
I was a bit peeved.
Well now I finally have the whole statement, from day one to the last day, with all the numbers. It makes good reading.
Now this was part of our original $265,000 mortgage that we took out to buy the family home. We split that into 2 bits – $100,000 was kept as a Variable rate Revolving Credit Mortgage, and the rest was kept as a Fixed Rate Mortgage for $165,000 – that’s the one we paid off.
- It started on 9th September 2005 with a rate of 7.42%
- The starting balance was $165,000
- The lowest interest rate we had was 5.42%
- The highest interest rate we had was 9.15%
- The average interest rate was 7.39%
- We took out a 20year term on it, but paid it in 56 months.
- Based on that – we should have paid $151,356 in interest if we had paid it at the normal 20year term.
- We actually paid $43,607 in interest
- We saved $107,749 in interest.
That’s seriously mind blowing!!!!
We still have $55,000 left to pay on the revolving credit part of the mortgage, but most months we don’t actually pay much interest on it because our savings sit in there and it doesn’t often go into a negative balance. It is at the moment while we have to adjust to Hubby’s self employed income, but its rare to have to pay interest on it.
Which is kinda cool.
You know – this was not easy to do, but it really wasn’t that hard either. And it was certainly worth the effort when you look at how much we avoid paying the bank from here on in. You know – having worked out that saving I think I need a cup of coffee and a sit down – because its one thing to know that that’s gonna happen. It’s a whole other ball game to know you actually did it.
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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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