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Have your say: Westpac eases lending criteria to offer 90% home loans
July 10th, 2009An article by Tina Law in the Press has highlighted that Westpac has been offering home loans at up to 90% of a property’s value. Mortgage brokers have also reported other banks lending more than 80%, Law said.
New Zealand’s banks tightened home loan lending ratios in late 2008 as the global financial crisis worsened a slump in the property market. Many banks dropped their 100% lending offers and moved to 80% being the maximum loan to value ratio.
Here are some cuts from the article. We welcome your thoughts and comments below.
For the first time since banks tightened mortgage lending last year, Westpac has started advertising for home buyers with a deposit of less than 20 per cent.
Mortgage brokers have reported other banks lending at more than 80 per cent of the value of the property.
Mike Pero Mortgages chief executive Shaun Riley said Westpac had been selectively lending up to 90 per cent of a property’s value.
He said Westpac was probably thinking property prices had either bottomed out or would not fall much further and it was now more comfortable about doing a higher volume of lending above 80 per cent of property value.
Westpac spokesman Craig Dowling said a combination of lower rates, funding being more accessible and vendors being more realistic on prices meant there were more opportunities for buyers.
He would not say how low Westpac would be prepared to go, but a 10 per cent deposit was within lending bounds. The bank would probably not provide 100 per cent mortgages.
ANZ National spokeswoman Virginia Stracey-Clitherow said it generally did not offer new lending in excess of 80 per cent, and it had no plans to change the policy.
ASB retail banking chief executive Ian Park said it still had a policy of obtaining a 20 per cent deposit, and he believed it was inappropriate to review that in the current market.
BNZ said it was continuing to provide home loans to customers with less than a 20 per cent deposit, but every application was treated on its merits.
Kiwibank acting chief executive Paul Brock said it had always lent to people with less than 20 per cent deposit, but some of its special interest rates were not available to those borrowers.
Your view?
Should banks be easing their lending ratios? Will this lead to another bubble? What will this mean for the correction in the housing market that some argue New Zealand needs?
We welcome your comments below.
Tags: ANZ, ASB, BNZ, Craig Dowling, home loan, Kiwibank, LVR, Mike Pero Mortgages, Mortgage rates, National, Shaun Riley, Tina Law, Westpac
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July 10th, 2009 at 1:31 pm
We can guess can’t we, the banks are certain property will not fall by more than another 10%, so what do they stand to lose? Mug peasants will think it’s xmas and pile in, just before the inflation hammer slams down on their empty heads.
July 10th, 2009 at 1:36 pm
Wally, the other way to look at it is that banks need to open up lending to avoid further property falls in the absence of further interest rate cuts.
July 10th, 2009 at 1:37 pm
maybe the banks are dumb and dont understand risk – it would not be the first time now would it??
July 10th, 2009 at 1:43 pm
Should banks be easing their lending ratios? This is up to the banks….many ppl struggle with getting the deposit for that first home, but are fine on the payments, often their rent is for a similar amount or more than the new mortgage payment!
Will this lead to another bubble?
3 months ago I (based on what others wrote) didnt think the easy credit would be available again….now Im not so sure….there is a lot of money chasing interest, shares look bombed out, commodities ditto…no where for speculators and hedge funds to put large amounts of $, US banks also have had huge hords of $s injected into them….so where is all this the money going to be put? Backing mortgages while not a huge return must look a decent return v risk (lowish). Also the last 6 months have not been too good for investors….so maybe these ppl with money are lending again, anywhere that shows some return so they dont look that bad by year end….
What will this mean for the correction in the housing market that some argue New Zealand needs?
It becomes less and less likely….but this is a bubble re-flate…there is still risk…ppl either seem to accept this, or ignore it….For me I get this feeling that there seems to be this over-riding desire/desperation to get a big return, mabe I should say “decent return” depending on your point of view. Ppl incl pensioners have got used to the this overly good income and have lived accordingly I suspect.
regards
July 10th, 2009 at 1:53 pm
Steven
if you are right (and I dont think you are), lets be clear, this is NOT a bubble reflate. The bubble still exists, it is the continution and further increase of the biggest bubble in financial history!!! If we dont act soon to deflate it a depression will become impossible to avoid and NZ’s financial collapse will be imminent.
July 10th, 2009 at 1:55 pm
Do the banks not see the coming Option-ARM crisis in the US as being significant, or is it just off their radar completely? Apparently the total value of loans under the Option-ARM schemes is the same as what was drawn up under subprime conditions, and these are also expected to default at the same rate. According to many commentators, this means that we basically have Subprime crisis 2.0 due to hit, starting at the end of this year and going for several years as the option-ARMs mature.
Won’t this just mean that global credit will crunch again shortly?
July 10th, 2009 at 3:33 pm
Its says something to me that we have this thread going on the same day as there is a thread going ,in response to the BNZ economist , Mark Walton’s comments. Do these bank guys really have any idea of whats going on around them ? I think whats behind Walton’s comments makes more sense.
BTW a bank in the UK is giving 125% mortgages to customers who have to shift homes so they can avoid loses if they are in negative equity with their existing home. Does this make any more sense ?
July 10th, 2009 at 3:43 pm
These posts are still dominated by rampant pessimism. Based on reading these 6 months ago, by now we should all be without jobs, houses worth 30% less than a year ago, banks all folded etc.etc.
Sorry guys, the world hasn’t ended, and (beggar them!) there are still people making money, getting out of debt, and looking for somewhere to stash their profits.
No doubt the comments are going to piling in on this one, so I’ll get in quick and say: IN TWELVE MONTHS TIME I RECKON THAT HOUSE PRICES ARE GOING TO BE MUCH THE SAME AS THEY ARE NOW, POSSIBLY UP 2-3%.
No point arguing, I’m absolutely convinced; just keep a note of this and see if you can laugh at me in 12 months time.
Byebye.
July 10th, 2009 at 3:58 pm
TUMTETUM Says:
July 10th, 2009 at 3:43 pm
Based on reading these 6 months ago, by now we should all be without jobs, houses worth 30% less than a year ago, banks all folded etc.etc.
I don’t think anyone has said any of that. Bernhard said that he could see house prices falling 30% by the end of 2010. bu we are still a year and a half away from that, and he has revisied that to 15% down.
Property is too large in NZ to fail, and most NZers base their value on the houses worth, as many NZers are asset rich, and cash poor.
July 10th, 2009 at 4:06 pm
TUMTETUM – it’s not pessimism, it’s just looking around and seeing what’s coming so that you can make sensible decisions. There are thousands of people and families across NZ who didn’t keep their ears to the ground over the last couple of years and have now shafted themselves financially by investing in stupid projects, properties and finance companies. The people who were realistic (and were called pessimists back then too) have been able to position themselves well, and I’m sure make up the bulk of the people who are now ‘making money, getting out of debt, and looking for somewhere to stash their profits’.
July 10th, 2009 at 4:35 pm
“as many NZers are asset rich, and cash poor” apart from those who owe 190 billion mostly in mortgages and think they are asset rich. Come the day the bill is presented by Mr Market for all the money printing and borrowing going on, it will be a case of most NZers are asset poor and have very low incomes if they have a job at all.
July 10th, 2009 at 5:03 pm
Tumtetum – the ultimate consequence of the deeply deflationary financial pathology that we face will probably and paradoxically be inflationary, delivering of course, a rise in nominal house prices. How can this be? Theoretically it is simple because governments can, in their increasing desperation, resort to ever more foolhardy measures to reflate ‘the peoples opium’ of house prices. Ultimately, if push comes to shove, they can even directly monetize everyone’s mortgage debt so we can all start again.
Of course, in such a scenario, the real value of assets like housing will keep falling – but that is not what matters to the ‘average Joe’. His myopic concern is for nominal prices and ‘how much he made’. Who knows, new nominal ‘highs’ could even give the government the pretext for a capital gains tax – whereby it could rob people of real (if depreciating) wages in return for a chimera of wealth.
I suspect the biggest mistake Kiwis make, when considering money, is to believe that the New Zealand Dollar is a constant against which ‘value’ can be reliably measured. Inflation is then naively assumed to be due to ‘the price of oil and butter etc’. Historically (through millennia) the monetary constant has been gold and, when one measures against same, the great Kiwi housing boom is exposed for the sham that it is! As I have commented before, the billion dollar Kiwi house is not beyond the realms of possibility – just make sure you have a decent wheelbarrow in which to take your banknotes in order to buy a week’s groceries!
July 10th, 2009 at 6:16 pm
Malcolm: a question from the economically sub-literate: what does “monetize everyone’s mortgage debt ” mean?
In my view taking a 90% mortgage is foolhardy in an uncertain NZ market with the Euro banks about to blow, California barely breathing on life-support and the option-ARMs in the US getting bigger every minute, while I’m seeing 80% off (!!!!) sales in the malls here and the likes of wily old Allen Hubbard having been caught up in the boom mentality.
Seems Westpac has looked at the sub-primes, decided the crisis is over and decided to do it again. What was the old definition of insanity?
Or does Westpac have to go that far to keep itself going?
July 10th, 2009 at 6:52 pm
The Aussie banks are awash with cash and need to make loans to make profits – there is demand for 90% housing loans and Westpac will do well out of it. Banks prefer to lend on homes rather than businesses.
July 10th, 2009 at 6:56 pm
Why is every one so shocked? It is not like the banks saw the housing bubble in the first place so why should they be aware of the continuation of the housing bubble?
To Steven – I don’t know a lot of people who’s rent is higher than the cost of owning the house they live in – where are they? Especially once you calculate rates, repairs, water etc. – not at todays prices – not yet.
July 10th, 2009 at 7:22 pm
Dear Wally – wah wah wah wah wah – you’re obviously right – being pessimistic is so simple – snuggle up to the worst case scenario and take your comfort there.
I was afraid and uncertain when I left home to study at 16, scared when I got married, uncertain when I had children, worried when I took on a mortgage, reluctant to invest etc, – and guess what, some of the less certain were the best decisions ever.
Wally – what are you afraid of? Other people may be happy, and they may not even be as brilliant and prescient as you?
July 10th, 2009 at 7:33 pm
Crazy! Absolute insane! The still existing price bubble will further inflate!
I sold in the last eight years two properties, both times with a moderate profit after upgrading. Capital from both properties is not enough, to get me at todays prices something similar, hence I am renting for the last 2 years waiting for the prices to get down. As a pensioner, the monthly rent for a 2 br.unit in a not posh suburb (Onehunga) is higher than my monthly pension, so I have to eat literally my capital, which is diminished not only by this, but also be deposit interest rates lower than annual inflation.
Bought never with a mortgage, never for speculation, invested the savings from a long working life. I am sure, many pensioners are in a similar situation, being punished for being frugal and somebody out there must be responsible that the purchasing power of our dollar is melting like butter n the sun.
July 10th, 2009 at 8:20 pm
Gertuad, you comments make me pause and I do feel for you.
With regard other comments, the lesson is property markets are not rational, they reflect the accumulation of market participants most who are driven by emotional decision making. The success of these markets is vital to large group of stakeholders in the economy. People who emotionally invest are the easiest to influence and effectively market to. Without a major economic shock to the real sector of the economy, I do not believe we will see major change to the property market.
Possibly one is developing as we speak, however I see no evidence to date of the downstream effects of one of sufficient magnitude.
An optimistic attitude can achieve a great deal. We are having a record year, solely being alert to opportunities and a disciplined approach to assessing the payoff.
Attitude and happiness in life go hand in hand.
July 10th, 2009 at 9:24 pm
Aarron.
I think you are spot on. KPMG published some good data on housing a couple of weeks ago. I am not sure why it wasn’t put up on this site. Anyway, 21% of mortgages exceed 80% of the value of the house and 8% exceed 90% of the value.
Given that there is $158 billion in lending to housing, 21% represents in excess of $33 billion that would be in negative equity if house prices fell by 20%. Even if the banks only lose 5% or 10% of that it still amounts to serious money. Anything more than a 20% fall in house prices and some banks could be looking distinctly unwell.
KPMG goes on to state:
In the poll on median house price falls, the most popular expectation is a 20% fall, and the next most popular is for 30%.
July 10th, 2009 at 9:27 pm
With this PM? what’s the risk!
July 10th, 2009 at 9:45 pm
PeterR – the polls are weighted down by a lot of pessimistic bloggers who spend too much time on the net – they also voted unemployment would soon be above 20%…..
July 10th, 2009 at 10:51 pm
Murray, you may have a point there as I read in the Telegraph two days ago that US interest rates on the $T’s (that’s T for Trillion), of national debt owed, is expected to climb from the current 3.5 % rate to 7% as a consequence of printing money.
I can only imagine where our own mortgage rates will be in six months as borrowing becomes more expensive again.
Personally, I’m with the prudent bloggers who are connected to the internet and realise that we are all a small part of the same ecco-system, t rying to understand the influences.
July 11th, 2009 at 12:11 am
Ruru, under a 100% fiat money system (money by decree) of the kind now effectively employed throughout the world governments could – in extremis – simply print (monetize) sufficient new money to extinguish everyone’s debts. In essence there is nothing to prevent this because no currency is now backed by gold. What would cause them to do this? Almost certainly it would involve an implicit – or explicit – threat of public violence sufficient to outweigh the protestation of savers who would be destroyed by the inflationary consequences of such an action. Such folly would also be encouraged by the fact that a hyperinflationary repudiation of debts would involve a massive transfer of wealth from ordinary Kiwis to the narrow cabal of vested interests who really run our affairs. This is essentially what happened in Weimar Germany and we would be foolhardy not to understand that the same thing could – conceivably – happen here!
The above is by no means certain but, ironically, is made more likely if a disorderly deflation takes hold. In my view deflation and inflation are simply the polar extremes of the same ‘disease of money’ and not separate financial pathologies as is commonly understood. What is the correct course of action? As a capitalist I would argue that it is to allow events to take their natural course letting house prices fall (and probably overshoot) their long-term average at about 2-3 times annual income. This will be objectionable to us ‘baby boomers’ and other vested interests – but good for our young people and the long-term interests of New Zealand!
It was the great British libertarian Lord Acton who reminded us that ‘the issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks’. I suspect the point is approaching where we will have to decide whether we simply resign ourselves as a nation to perpetual debt enslavement – or whether, as Lord Acton forsaw, the banks are finally confronted and put in their place.
July 11th, 2009 at 7:48 am
Malcolm makes a bit of sense, but just confirms a suspicion I have; that property is not a bad investment right now in terms of protecting wealth from the inflation that is most likely coming our way.
Those clever chaps sitting on their cash waiting for the market to ‘bottom’ might just get a nasty shock one day to find they’re not worth half what they thought they were. (Maybe they’ll enjoy taking their entire savings in a wheelbarrow down to the supermarket to buy a loaf of bread.)
I wouldn’t advise on a decent wheelbarrow though – you’re likely to get mugged for it and be left with a pile of cash at your feet and no way of transporting it.
July 11th, 2009 at 8:08 am
TUMTETUM, do please take some time to study the events in Germany post WW1.
You may well change your opinion on there being protection within a hyper inflation event for property owners, even those who are freehold. The safety you think exists is dependent upon the whole of the economy remaining viable, remaining ‘wealthy’.
And on the other side of the coin, you fail to grasp the fact that those who hold cash today, are able to shift it out of the Kiwi$ into gold or another currency at the push of a keyboard button. Granted such a rush to exit the Kiwi would drop its value. The point being, it is not so easy to sell property in an economy where the vast bulk of the pop is deeply in debt and trying to survive very high rates on the debt. You keep forgetting TUMTETUM, the outstanding hundreds of billions of debt owed by NZ to the creditors!
There is a brilliant film on Rialto( it will repeat) about the life of a man during the era of the Nazi rise to power and how people with money in Germany bought stamps as the currency crashed. Gold and gems they knew were difficult to hide but stamps were not. Nobody wanted to buy property then TUMTETUM. Think about it.
July 11th, 2009 at 9:24 am
Can’t remember in history when cash kept up with inflation, property however…..
July 11th, 2009 at 10:41 am
Lets look at this from a banks point of few….Or put another way, know your enemy
I have a heap of mortgages at 90/100% and the value of the asset is dropping.
Im in a market , that even if customers default, long term in most cases I can still recover that investment…..and afford to right off a few %
BUT if house values fall 25/30% back to the long term ave, In going to be in deep proverbial.
So I have to manipulate the market to artificially hold it up longer till the long term ave gets higher…what do I do?
Get guyers for many of those houses that are in trouble, but no one has any savings…
So if no deposit, make it easier to have a desposit…so decrease the 20% to 10% where the customer has secure as can be income, most properly other assets not highly leveraged, and they are picking up bargains.
I have now limited any potential major loses if/when in the immediate future (6 months to 2 yrs) the market continued to move to meet the long term ave.
In effect I have moved my potential risk/loses to a wider spectrum of my customers…
Or put another way..they will carry (most of) the can
Once upon a time one could trust the advice of ones bank manager, now the bank manager, is a Mobile sales rep who lacks the experience and know how, and work solely in the interest of the bank. The problem here is Joe Public still puts their faith in their bank manager for advice…and the banks take advantage of this.
Joe public has got to get back to the Shakespearian concept of Shylock.
My veiw is banks are a service, and as a service should operate in the same manner as you mechanic changing your oil, checking WoF etc….
Experianced mechanic can check/certify a car for safety but due to unsucrilous operators the LTSA has regulations what is safe and not safe and regulates who is qualified to say so.
Banks need tighter regulations to do what is right for the country and its customers, If they cant act responsabily, then regulate them in their desposits to loan ratios, regulate min desposits to protect customers from themselves.
This whole boom, rescssion has only come about since such regulations/control was lifted in the late 80s….free market..or put another way , allowed banks to take advanage of joe publics ignorance and screw him in the name of profit at any cost.
We had Cullen warning of impending dangers, the RNZB jumping up and down now….
These are the same people who are ment to be laying the law down and all we get is “please mister bank, we need or co operation?” and instead they get a hand sign back.
July 11th, 2009 at 11:01 am
Murray, buy gold mate. Better still buy part of a gold miner paying a div.
July 11th, 2009 at 11:59 am
Steps.
A good description of the banks point of view. But lets also put the banks into a cultural/political context. Who took away the regulation, and why?
It was no accident, and banks were happy to make the most of the opportunities presented. But politicains and voters both wanted increased consumption, ‘growth’ and wealth without having to produce it. The only practical way to achieve that was through expanding credit, and banks one of the tools available.
July 11th, 2009 at 1:40 pm
Isn’t this just a matter of business? Bank’s business is to lend money to whoever wishes to borrow as long as the bank can hedge their risk (mortgage, guarantee etc etc)
If there are people willing to stick their neck out and bury themselves in debt who are we to question if the banks put a long rope round it ? But seriously speaking, bank’s must be willing to lend more now most probably because they cannot find enough business lending at 80%, so let’s relax it a little and make it 90%……”in the end it’s business and we have to make a living”. If they can’t lend, they can’t make a living. As to risk, they is always second charge on existing assets etc etc. That’s why the comment on “credit worthy” and such.
If at all we disagree with this policy and deem it as risky, then we should avoid such banks with our money and our goverment (through RBNZ) should rightly tell them in no uncertain terms that they have no more “safety net” if and when they fail.
July 11th, 2009 at 3:04 pm
Jimmy: banks and risk, but who owns the risk really? the banks? no, the house owner, if its residential then the banks seem to be allowing ppl to sit on neg equity, but from what ive read not so much landlords….I mean for residential if forced to foreclose the bank can still chase for the loss, you would have to skip the country to dodge it and Im not sure you can then….
“this is NOT a bubble reflate”, maybe I should have ben clearer…I meant more along the lines of the housing bubble being maintained after a bit of a leak, while some see it as we have bottomed and off we go again, I dont….but I think there is the possibility that it will indeed reflate, there is a lot of money out there and no where to put it….
Nath: the Govn will bail them out again as the ARMs /Prime hit….but also expect a double whammy, commercial at the same time…..but its OK the US/UK Govn will bail them yet again…so, “Won’t this just mean that global credit will crunch again shortly?” yes but who knows what will happen when govns throw stacks of cash at the problem….we are being indebted for 2+ generations because of some bankers greed and political incompetancy….its slavery pure and simple…I’d happily hang a few bankers…they are ruining our lives….
Mimi: I suppose it depends on the ppl you work with…the younger ones I have come across in IT, ie Gen X seem to be paying huge amounts to rent houses….$2k seems not that out of bounds and $1600 typical….you can get a lot of mortgage for that much $ a month….in fact by sorted’s calculator at 7% $280000 is $1978 a month…
regards
July 11th, 2009 at 3:11 pm
Wally: the word is gold is oversold…..too many ppl in it already so it could go down esp at $1000 its very high….so silver maybe…but I agree mine shares seem the better bet, not so volitile…
Gee this is one interesting ride lots of blind corners and step drops….from reading about the 1930s Depression if you had and kept a job you were not too badly off throughout that decade….ditto right now I think, got a safe job and you just dont feel scared [yet]…..
regards
July 12th, 2009 at 12:12 pm
Who thinks interest rates are on the way down again? 10 yr bods have fallen.
Oil has fallen and fallen.
Australia and China are about to have a big bust up and the Aussie unions just might hold up iron ore shipments if the China doesn’t return the Rio manager they put in jail.
Aussie banks are awash with cash as are aussie investors. ANZ raised 2.2 billion this week from mum and dad share investors.
Panic in the Aussie house market. Lack of supply.
Housing needs 155000 per year but build way short;
http://www.propertytalk.com/forum/showthread.php?t=22161
Immigaration strong therefore house sales good.
NZ exports are strong and growing. NZ imports are weak and staying that way.
All part of the picture.
Housing does not exist in isolation and neither does our economy.
July 12th, 2009 at 9:53 pm
What conditions are Westpac putting around these 90% loans? When I worked as a retail banker doing housing loans I saw the conditions around these get looser & looser. It had to tighten at some stage. So you need to question if these are for everybody, or just the first year lawyers and doctors etc.
All the other big banks (ANZ/Nat, BNZ, ASB etc) will do the 90% again and may even be doing them now, they just won’t be advertising the fact. Once their risk profile hits the magic numbers, they will be in boots and all. They will hate, hate, hate that they are losing customers to Westpac.
The bean counters at the top will be looking at the write-offs, and if they haven’t done too many, expect the purse strings to open again. Yes, economic factors will play a part, but your average branch manager is not an old school banker concerned with risk factors etc. They are a sales manager with targets to hit and will be screaming to head office that they are losing business due to lending criteria. That will pressure the head office boys to ease up as soon as they are able.
The NZ banking market changed many years ago, old school is out. Selling school is in.
July 13th, 2009 at 8:27 am
we are getting on the same old treadmill once again
will we never learn!!
deposits should not be less than 20%
and bollard/key should stop slashing interest rates
but should encourage savings!!
until some clarity is demonstrated we will remain unclear as to the desired fiscal policy direction
July 13th, 2009 at 9:43 am
PeterR Says:
Steps.
“A good description of the banks point of view. But lets also put the banks into a cultural/political context. Who took away the regulation, and why?
It was no accident, and banks were happy to make the most of the opportunities presented. But politicians and voters both wanted increased consumption, ‘growth’ and wealth without having to produce it. The only practical way to achieve that was through expanding credit, and banks one of the tools available.”
The took these tools away…the world wide political view at the time was “lets trust 100% in a free market system” forgetting that in the free market system, any capitalist system, the prime legal responsibility for directors is maximise returns to shareholders…that is by any legal means….or put another way , there is no social responsibility, that is the law.
It took the banks 5 to 10 yrs after regulations where removed to wind up into a massive over leveraging around the world.
The mistake of the regulators was to remove the safety barriers to protect social responsibility, when they should have kept them, and simply adjust the ratios in the same way the OCD is used as circumstances determine.
At the time these regulations where removed there was deep concern from many , that the RB would no longer have effective powers to tweak, manipulate the economy.
So we now have the RB saying “please mister bank, be nice, pretty please”
A government that cant govern events.
Its like a policeman saying at a drink drive checkpoint to a paralytic driver…”please mister driver dont drive home, and legally have to hand the keys back” rather than “OK follow me sir, you are under arrest”
July 21st, 2009 at 10:32 pm
These times banks are getting close to 100% housing loans.It’s already on the move in SA
July 22nd, 2009 at 8:25 am
More lending for more houses = worsing of n.z’s major issue of foreign debt (already climbing higher and higher,already had international attention and ratings downgrade) = international money dry’s up (what we’ve been using to live off, inflate paper prices of houses for last decade) and interest rates sky rocket to attract them again = housing more and more unaffordable = housing plunge even more than predicted if we let things ease to proper lows now.
Look at iceland for a primer on whats going to happen in NZ unless government steps in to curb bank lending.
July 22nd, 2009 at 8:52 am
Fat chance of the govt stepping in here Simon! Look at the “bigger picture” as English terms it, look at the ocean of bargains opening up for those who avoid the insanity and stay cashed up and debt free. Post the collapse, you will pick up property as cheap as chips and then be sitting pretty when the wall of inflation arrives. The economy will be dead in the bog of debt for decades. That’s why Goofy and his mates in the Beehive are letting the canoe take the plunge over the falls. They are the only ones with the chutes!
July 22nd, 2009 at 8:56 am
The comparison with Iceland is getting tiresome and just plain silly. Might as well compare to Somalia, or the moon. Nothing like a few histrionics with the hysteria.
July 22nd, 2009 at 9:12 am
Bollard recently:
“He said interest rates were a blunt instrument to curb borrowing, and expected to see prudential policy playing a greater role in monetary policy settings, by offering “a more direct approach to constraining excessive or misdirected borrowing and lending behavior.””
So looks like some moves to prevent the above scenario are being thought up, lets hope it happens sooner rather than later.
July 22nd, 2009 at 9:18 am
And icelands a great case study of what happens when banks have enough rope to hang themselves with….
July 22nd, 2009 at 10:11 am
““a more direct approach to constraining excessive or misdirected borrowing and lending behavior.” Yeah sure. Like Bollard’s moving more slowly than a glacier. meanwhile the two fools mum and dad are being sucked into mortgage debt, quite unable to comprehend why the 2 bedroom shack they know was sold for $135ooo in 2003 is now priced at $345ooo and listed as cheap.