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ANZ and National raise their longer fixed mortgage rates
Responding to rises in longer term bond yields on wholesale markets, ANZ and National have increased their three, four and five year mortgage rates by as much as 35 basis points.
Long term mortgage rates had stabilised after a sharp rise in mid-March, but wholesale markets have pushed rates higher in the last couple of weeks on fears globally of heavy government borrowing. The imminent budget here has focused thoughts locally, with many expecting Finance Minister Bill English to announce bond issues over the next 4 years of close to NZ$50 billion later on Thursday.
Prime Minister John Key has said the primary focus of the budget due at 2.30pm today is to avoid a credit rating downgrade, given it would push up mortgage rates by 1.5%. Long term mortgage rates have bounced around 2% from their late February lows.
ANZ and National increased their 3 year fixed rate to 6.85% from 6.75%. They lifted their 4 year rates to 7.4% from 7.15% and their 5 year rates to 7.85% from 7.5%.
See all mortgage rates from all the banks in our rates table here.
and the deluge of soverign
and the deluge of soverign borrowing has not really started! It's anyone's guess then how high rates will climb but climb they will. The ocr is left a useless token of the RBNZ gameplan to pork activity with cheaper credit in an economy swimming in debt.
Had to happen, the rise
Had to happen, the rise in long dated US debt is on-going.
Can anyone see the rise
Can anyone see the rise of 1989- TO 1991 RATES OF 17%PLUS or higher when in some instances 21% .COULD HISTORY REPEAT.Whats your take on that Bernard
jill, Correct me if I
jill,
Correct me if I am wrong, but those high interest rates were essentially engineered to get inflation under control. That spelt the end of high inflation, and we haven't again seen inflation anywhere near the levels the used to be ordinary back in the 70's and 80's. So IMO 17-21% (or anywhere near that) can be ruled out
Strange that the housing market
Strange that the housing market is surging despite the higher interest rates.
matthew, I'm not an expert
matthew, I'm not an expert but I think you are correct in your statement that high interest rates were used to stem inflation. Right now our inflation is low but in 12-24 months time everyone is expecting it to increase with all the extra spending power of consumers caused by low rates. Point being in 12-24 months time inflation might be racing away (no doubt fuelled by the housing sector in part again and a further increase in the bubble) so high interest rates cannot be discounted. I can envisage our floating interest rate climbing into the 10%+ range. As per Jill, Bernard, what say you?
Thanks Mathew sounds good,and unemployment
Thanks Mathew sounds good,and unemployment was 10% app.except we are headed for borrowings of 50 BILLION PLUS,how would that fit into the higher interest equation.
The Bank Manager Says: "Strange
The Bank Manager Says:
"Strange that the housing market is surging despite the higher interest rates."
Yes...OR is it?.. on the surface it may seem to be, closer analysis and break down of stats...no. What is selling, at what it is selling at is totally different to the 2002 to 2007 period.
jill Says:
"Can anyone see the rise of 1989- TO 1991 RATES OF 17%PLUS or higher when in some instances 21% .COULD HISTORY REPEAT.Whats your take on that Bernard"
Yes, lower the drop, the bigger the knee jerk reaction, the bigger the increase further down the line...take a look at the early 70s, and the results towards the end of the Muldoon era...rates getting up into the high 20s.
This time round in NZ , depending how much is imported, I dont see getting to the highs of previous decades due to the lack of the Key Government having the same knee jerk as off shore....but with the US etc printing money, protectionism etc...it could very well be on the cards.
Back to basics
What goes up must come down
Action and reaction the bigger the reaction the bigger the reaction
With Key/English going against much of the self interest 'advice' with conservative tinkering of interest rates etc, the reaction will be less...than it would be with the off shore panic , knee jerk reactions.
I just remembered that most
I just remembered that most of the media will be in the budget lockup as they see and hear how the good ship NZ sails into unchartered waters and attempts to rescue 4MILLION PEOPLE from economic disaster,out will come the self interest people who for some reason will try to cruzify the well meaning rescue package,hope not .
Interest rates will be high
Interest rates will be high but I think Governments will allow inflation to be much higher so as to steal the money from the savers to give to the borrowers.
No incentive to save anymore. Spend it before you lose it. Int rates 10%, Inflation 20%?
How about inflation neg 4
How about inflation neg 4 interest rates %11. Then 'we are stuffed'
Keep your 10.35am post and
Keep your 10.35am post and nail it to the milking shed wall, Andrewj. You'll laugh (?!) about how right you were one day. Not too sure how many cows you'll have left though....
Sorry Jill and Matthew, you
Sorry Jill and Matthew, you are both wrong. The current rise in long term interest rates (which central bankers don't seem to have much influence) is a result of "inflation expectation" from investors. Due to rampant QE by Developed countries, investors are just marking in the expected inflation this action will cause in the long term.
Believe me, right now no Central Bankers is interested in combatting inflation, on the contrary they are dead set on creating inflation...although not sucessful so far.
Soon we will see a bigger and bigger gap between short and long term interest rates as Central bankers keep forcing short term rates down but lossing control over the long term rates. This will also force money into the precious metal and commodities markets as a hedge againsts inflation.
RESULT: Food and energy inflation and asset deflation....STAGFLATION.
http://www.dailyreckoning.com.au/choking-on-debt-in-the-unfolding-anglo-...
I'm with you Kin, any
I'm with you Kin, any room in the boat?
Maybe Obama will hire that fool Gono who achieved so much with the Zimbabwe toilet paper.
My pick is copper. Maybe a bit of gold. Avoid bonds and property.