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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Why exactly should interest rates in New Zealand go up?
Filed under: Banks, Cost of living, Economics, Interest Rates, Credit Cards & Mortgages in NZ
The reserve bank meets tomorrow to tell us all whether our interest rates are going up. I’m not really sure why they need to bother because as usual the papers and so called “experts” have already told us they will be going up.
But why?
Well basically Reading through an awful lot of very boring guff, it’s because things are getting better financially for New Zealand. And what better way to celebrate than for some arse to tell us our mortgages have to get more expensive. I mean- it wouldn’t do for us to go out and try and spend some of the extra money we all apparently have burning a hole in our pockets!
I know life isn’t meant to be fair, but come on Mr Bollard. This year we are already getting an increase in GST, and due to the new emissions trading scheme the power companies are going to increase our power bills and petrol is going to have more tax on it, even Air New Zealand is upping the cost of flights to cover it. And it’s not as if the banks are charging fair mortgage rates in line with the the reserve bank anyway. The bank fixed rates are the same as when the OCR was twice what it is now. And yet it almost worth betting real money that an increase on Thursday will be a perfect excuse for the banks to charge even more.
I just don’t get it.
They giveth with one hand and they nick it straight back with the other!
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ASB Interest rate changes – humph!
I’ve been tracking interest rate changes at ASB for a while, because I needed to decide on when to fix my personal morgtae rates. I set that up a few months ago, but noticed at the weekend that the rates had gone up again. Today it seems that other banks have followed the lead, and mortgages are now firmly going up again. This is even though the Offical Cash Rate is stable and has been for months, at 2.5%.
So I’m afraid that mortgeages in New Zealand are still going to be ridiculously high and unless you intend to buy a house here in cash – you are still going to be paying an awful lot of money to buy a house here.
ASB INTEREST RATES
As at 11:56:19 a.m., Tuesday 14 April 2009
Interest rates are subject to change at any time without notice. However, once you draw down a housing fixed loan its rate is will not change during the term you selected. Term Rate
Housing Variable 6.40 % p.a.
Housing Fixed (6 Month) 5.50 % p.a.
Housing Fixed (12 Month) 5.70 % p.a.
Housing Fixed (18 Month) 6.00 % p.a.
Housing Fixed (24 Month) 6.25 % p.a.
Housing Fixed (36 Month) 6.75 % p.a.
Housing Fixed (48 Month) 7.25 % p.a.
Housing Fixed (60 Month) 7.50 % p.a.
ORBIT Home Loan 6.40 % p.a.
Societies Clubs and Churches 7.40 % p.a.
Second Mortgage 9.40 % p.a.
Flexible Finance Facility 6.90 % p.a.
As at 09:54:59 a.m., Tuesday 26 May 2009
Interest rates are subject to change at any time without notice. However, once you draw down a housing fixed loan its rate is will not change during the term you selected. Term Rate
Housing Variable 6.40 % p.a.
Housing Fixed (6 Month) 5.50 % p.a.
Housing Fixed (12 Month) 5.50 % p.a.
Housing Fixed (18 Month) 6.00 % p.a.
Housing Fixed (24 Month) 6.25 % p.a.
Housing Fixed (36 Month) 6.75 % p.a.
Housing Fixed (48 Month) 7.25 % p.a.
Housing Fixed (60 Month) 7.50 % p.a.
ORBIT Home Loan 6.40 % p.a.
Societies Clubs and Churches 7.40 % p.a.
Second Mortgage 9.40 % p.a.
Flexible Finance Facility 6.90 % p.a.
As at 02:10:44 p.m., Friday 5 June 2009
Interest rates are subject to change at any time without notice. However, once you draw down a housing fixed loan its rate is will not change during the term you selected. Term Rate
Housing Variable 6.40 % p.a.
Housing Fixed (6 Month) 5.50 % p.a.
Housing Fixed (12 Month) 5.50 % p.a.
Housing Fixed (18 Month) 6.00 % p.a.
Housing Fixed (24 Month) 6.25 % p.a.
Housing Fixed (36 Month) 6.95 % p.a.
Housing Fixed (48 Month) 7.55 % p.a.
Housing Fixed (60 Month) 8.00 % p.a.
ORBIT Home Loan 6.40 % p.a.
Societies Clubs and Churches 7.40 % p.a.
Second Mortgage 9.40 % p.a.
Flexible Finance Facility 6.90 % p.a.
As at 03:14:43 p.m., Friday 7 August 2009
Interest rates are subject to change at any time without notice. However, once you draw down a housing fixed loan its rate is will not change during the term you selected. Term Rate
Housing Variable 6.40 % p.a.
Housing Fixed (6 Month) 5.50 % p.a.
Housing Fixed (12 Month) 5.50 % p.a.
Housing Fixed (18 Month) 6.10 % p.a.
Housing Fixed (24 Month) 6.55 % p.a.
Housing Fixed (36 Month) 7.45 % p.a.
Housing Fixed (48 Month) 7.95 % p.a.
Housing Fixed (60 Month) 8.30 % p.a.
ORBIT Home Loan 6.40 % p.a.
Societies Clubs and Churches 7.40 % p.a.
Second Mortgage 9.40 % p.a.
Flexible Finance Facility 6.90 % p.a.
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Now even our MP’s want to know why the banks are ripping us off.
Filed under: Banks, General Budgeting, Interest Rates, Credit Cards & Mortgages in NZ, Property & General Investing
Despite a 2.5% cash rate, and Standard and Poor’s not downgrading the country’s economic status, the New Zealand banks are still on a rort, ripping us off with now 8% interest rates on 5 year fixed terms. I don’t know how they sleep at night – I really don’t.
According to an article on Stuff, the MP’s in a cross part committee (well – we are bound to see some action there then) have expressed their concern over the lack of action from the banks. Especially since they now have a guarentee on deposits from the government. Heres a thought – take the guarentee off them till they learn to behave! Especially since its us taxpayers that are covering it while they beat the crap out of our budgets!.
Today, Bill English, the finance minister has said that we, the consumers, should make our displeasure known by taking our business elsewhere. What elsewhere??? They are all as bad – all charging way too much, and if you try and move, you will have to prove the (now lower) value on your house and have a bigger deposit. And you will probably get screwed on break fees. So nice thought – just not very practical right now. Trust me – If I could change banks – I would!
At the moment the only way to beat the banks greed is to pay off any mortgage as fast as humanly possible. I’m just coming to the end of my fixed terms with ASB ( they hold 2 personal and two business mortgages of mine). I’m not fixing the personal ones – because I don’t intend to have them much longer than a year from now. I’ve fixed one of the business ones for two years. I would have fixed for 5 – but as they are being ridiculously stupid by putting up their 5 year rate – they can frankly go to hell!
When we stared buying investment properties, our intention was to never pay off the mortgages on them (the ASB business mortgage is secured against the family home – so we always intended to pay that one off) – but the way they are behaving – I think I’m changing my mind on this stance.
If you are thinking of moving to New Zealand (and there are many reasons to do so) please be aware of just how much you are going to get hammered for if you need a mortgage. And bear in mind that these banks are still expecting 20% deposits of you – so they are not only overcharging, but they are not exactly taking a risk on lending either. You are now looking at between 6 and 8% interest on your mortgage in New Zealand.
Anyway – as far as the personal mortgage goes – I had always intended to pay it off in 10 years. Looks like I’ll be doing it in 5years – which means by the end of 10 years I should be able to get rid of the two business mortgages at ASB as well. That will be a good day.
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How much does it cost to make money?
There was an interesting question raised on Property Talk about the cost of manufacturing money. The Reserve Bank of New Zealand refused to answer the question on the basis that it was commercially sensitive. Load of old tosh! The thread is a bit dull and all about the “economy” and how debt has screwed us all, and how money isn’t money anymore. But anyway – it reminded me of a quote I wanted to use in my book, but couldn’t find space for.
It’s from a book by Terry Pratchett, one of my favourite authors, called funnily enough; Making Money. It is set around the Ankh Morpork mint, run by the newly appointed Moist Von Lipwig.
Moist Von Lipwig.
So how do you get paid?
Mr Shady.
This is a mint sir.
Moist Von Lipwig.
You make your own wages? Well at least you are in a profitable business. I mean you must be making money hand over fist.
Mr Shady.
We manage to break even, sir, yes.
Moist Von Lipwig.
Break even? You’re a mint! How can you not make a profit by making money?
Mr Shady.
Overhead sir. There’s overheads everywhere you look.
Moist Von Lipwig.
Even underfoot?
Mr Shady.
There too, sir. Its ruinous sire, it really is. Y’see it costs a ha’penny to make a farthin’ an’ nearly a penny to make a ha’penny and a penny comes in at a penny farthin’. Sixpences cost tuppence farthin’ so we are in pocket there, half a dollar costs seven pence but its only sixpence to make a dollar. The real buggers are the mites, ‘cos they’re worth half a farthin’ but cost sixpence ‘cos its fiddly work. The thrupenny bit we’ve only got a couple of people making those – which is a lot of work that runs out at seven pence. And don’t ask me about the tuppenny piece.
Moist Von Lipwig
What about the tuppenny piece?
Mr Shady.
I’m glad you asked me that sir. Fine work sir, tots up to seven and one sixteenth pence.
From Terry Pratchett: Making Money
BTW – this book also contains a wonderful machine called The Glooper – based on the Moniac machine in the RBNZ museum – only much funnier.
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What on Earth is ASB Bank playing at?
Filed under: Cost of living, General Budgeting, Interest Rates, Credit Cards & Mortgages in NZ, Retirement, Pensions and Kiwisaver
So, the Official Cash rate in New Zealand is at an all time low, and as of a few weeks ago was still dropping. There is no sign that the Reserve Bank of New Zealand is about to start raising the interest rate again soon.
So why would ASB bank raise their 3 and 5 year fixed interest rates by 0.5% yesterday???
It’s not as if they have ever passed anywhere near the full interest rate drops onto its customers. When I first took out my mortgage with them, there was about a 1% difference between the OCR at the time, and the rate I was paying. With the discount I got, it was even less than that. Currently – that 5-year rate gives a whopping 3.25% difference. Talk about creaming the situation.
It looks like the other banks are following suit.
So what does this mean?
It is not good news for anyone looking to buy a house. Not only does it look like the banks are refusing to allow us to have sensible interest rates, but we also now need 20% deposits. There just are not many people who can buy under those circumstances. A lot of UK migrants would be OK – assuming that they managed to get any money out of their UK property. (I am really grateful right now that my parents took a huge leap of faith in our emigration plans and sold their house when we emigrated here, which means they do not have to sell up now in an horrendous market and can just pack up and move).
It also means more uncertainty for people trying to organise budgets and living costs. With this move, it makes it even harder to work out whether to break a fixed rate, re-fix or stay floating. When banks put up their long term fixed rates – it tends to suggest that they think the OCR will start gong up. But will it? No one knows, and its getting harder and harder to make sensible decisions about your mortgage rates and to budget for them.
I’m really disappointed in ASB, especially as I found out yesterday that they will no longer negotiate on rates for their revolving credit mortgages. As they also no longer negotiate on their bank fees – I wonder why the still employ people in a “negotiations” department.
And New Zealand Interest rates come down yet again.
Filed under: General Budgeting, Interest Rates, Credit Cards & Mortgages in NZ, Retirement, Pensions and Kiwisaver
Alan Bollard (bless his little cotton socks) has dropped the official cash rate in New Zealand to 3%. A bit of a wet blanket, this one, as he only dropped it 0.5%. He now claims that we are about to reach the bottom of the recession, and so we shouldn’t hope for too many more drops. Hmmm – I guess we are expected to trust the man.He also says the economy should pick up after the middle of the year.
The thing is – people are so scared – I’m not sure that is going to happen. The problem with many economists is they tie their heads up so much with numbers: interest rates; exchange rates; GDP; imports and exports – that they forget that no one has any money to buy things with. People, and the way we think, just get forgotten at the bottom of the pile while the top dogs wring their hands together telling us what we should think.
Last year – Bollard was telling us all to stop spending money. And we listened. And the economy of New Zealand came to grinding halt. Now – he wants us to start spending again!
Why should we make the decision on how much money we should spend or save based on what Alan Bollard thinks? (This applies to anyone who is saying what we should do in the current “crisis” – Mr Bollard just happens to be my own pet peeve).
Any decisions on what you spend your money on should be based on whether you and your family can afford it. How you handle your money in times like these should actually be exactly the same as in any other time:
- Spend less that you earn
- Save a percentage of any earnings for yourself and your future.
- Don’t buy things on Credit that you cannot afford.
- Don’t have credit card debt.
- Get rid of any bad debts.
Interest rate in New Zealand is now 3.5%
Filed under: Interest Rates, Credit Cards & Mortgages in NZ
Alan Bollard, of the Reserve Bank of New Zealand, whacked a stunning 1.5% off the official cash rate.
This means that we don’t have the highest OCR anymore – Australia sits at 4%.
Just have a look at this graph from www.interest.co.nz
Now – hands up who could have predicted that?
Oh well, it means at least my personal mortgage is going to paid off even faster. And even better for anyone who has a 20% deposit to buy a house.
You can read a fuller blog about this – with plenty of commentary from readers at The Ratesblog.
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.
New Zealand Banks and the Economic Crisis.
Filed under: Banks, General Budgeting, Interest Rates, Credit Cards & Mortgages in NZ, Life in New Zealand, Property & General Investing
Ok, so I think we all know that the western world in is the financial toilet, and that governments and reserve banks are slashing interest rates and telling us to go and spend up large and do our civic duty and keep the economies ago.
But how are the New Zealand Banks behaving right now?
Some of them – pretty damn poorly in my opinion.
I currently use 3 banks – ASB who have my main accounts and my home Mortgage, and ANZ and Westpac who each have an Investment Mortgage.
Like many people, we have a few mortgages on Fixed rates, and so because of the rapidly falling base rate – we’re ending up with Fixed Interest rates higher than the floating rate – and quite a bit higher than the current fixed rate.
So, also like many people – I investigated the options for breaking those fixed loans before the current round of rate cuts last week.
Both ASB and ANZ worked out the break fee based on the difference between the Interest rate we were currently on, and the rate that they were offering at that time. The fee is then worked out based on the amount of time the fixed rate has left to run.
With ASB, it meant our two fixed rates would cost a total of $5000 to break. That is for a 1-year fix with 10 months left to go, and a 2-year fix with 17 months to go.
ANZ wanted a whopping $19,000, to break a 5-year fix with 4 years to go.
Westpac on the other hand wanted an absolutely ginormous $43,000 to break a 5 year fix with 4 years to go.
Why the big difference – well Westpac don’t calculate on the difference in the rate you are on and the rate at
the time. The work it out on the difference in the rate you are on and the WHOLESALE rate – which is quite a bit lower than the rate we mere mortals pay. So you get stung – badly.
So, not having a handy $63,000 sitting around that I can throw at the banks – I’ve had to keep my Investment mortgages at the current rates. I’m not a happy bunny – but that’s the risk you take when you used Fixed Rates loans. To break without the fees, you have to do so when the Current rate (or with Westpac the wholesale rate) is the same or higher than the one you are on.
Honestly – it’s a game of chicken. You are trying to dodge between the banks and the Governor of the Reserve Bank and work out who’s going to do what, and which way you should jump.
And of course the banks don’t pass on the entire drop. Because that would be too kind.
While I don’t think we can blame the banks for the current crises (we after all spent the money collectively on one helluva shopping binge) – I do think that they are getting a nice fat bail out round the world from Governments and the entire financial sector. Would it really hurt their bottom line and shareholders if just for a while they passed on some of that goodwill to the customers of the banks??? Gave us a bit of a bail out??? Didn’t try to extort in some cases hundreds of thousands out of their customers to break the fixed rates????
After all – these are highly unusual times, and the huge and rapid drops in the Base rates are basically unheard of. In the first quarter of 2008 – rates were pegged to go well over 10%. Not drop through the floor to around 7%.
With apparently 70% of all mortgages in New Zealand being Fixed Rates – the lowering base rate doesn’t help that many mortgage holders. And because at the same time as lowing the rates, the banks are demanding higher deposits – the situation doesn’t help First Home Buyers either.
And you know the most galling bit? Both ANZ and Westpac, when we took out these loans, were desperate to snatch ALL our bank accounts from ASB. They would prove their worth they said. They would win our business! They would show us how much better than ASB they were.
All I can say is that I will remember how Westpac, 
ANZ and National Bank have behaved in the past few weeks, and when things change round again – as they will – and they again want to throw money at me – I will chuckle – and go elsewhere.
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