RBNZ wants interest rates lower, faster; Works towards introducing Funding for Lending programme before cutting the OCR next year

RBNZ wants interest rates lower, faster; Works towards introducing Funding for Lending programme before cutting the OCR next year
Adrian Orr

The Reserve Bank’s (RBNZ) Monetary Policy Committee is planning to introduce a Funding for Lending Programme (FLP) before it cuts the Official Cash Rate (OCR) next year.

It essentially wants to push interest rates lower in coming months without going back on its word and cutting the OCR before March 2021.  

The Committee in March 2020 said it would keep the OCR at 0.25% for at least a year. On Wednesday, it used the same language it has in the past, confirming the OCR would be held at 0.25% “in accordance with the guidance issued on 16 March”.

However the Committee directed the central bank to get ready to offer low-cost, secured, long-term funding to banks by the end of this calendar year.

In August, it indicated its preference was to combine the introduction of this FLP with a negative OCR.

But on Wednesday the Committee agreed it could try to speed up the process of lowering interest rates even further by deploying the FLP first.

“Members noted staff advice that deploying an FLP before the forward guidance period for holding the OCR ends could provide additional stimulus to the economy sooner,” it said.

“Having an FLP in place earlier would provide certainty to financial institutions planning their funding needs, and speed up the transmission of the programme by allowing banks to replace funding as it matures over time.

“The Committee agreed that providing term funding at rates near the OCR via an FLP would lower the financial system’s funding costs, and therefore borrowing costs for firms and households, and support the availability of credit to the economy.

“The effectiveness of the programme would be influenced by the degree to which financial institutions passed on their funding cost declines to their customers.

“Members agreed that they preferred to launch an FLP before the end of 2020.”

The Committee said purchases of foreign assets and interest rate swaps also remained "under consideration", as it considered using new tools to boost inflation and employment in line with its mandate. 

It agreed to maintain its existing Large-Scale Asset Purchase (LSAP), or "QE", programme. The RBNZ has committed to buying up to $100 billion of mostly New Zealand Government Bonds from the secondary market by June 2022. 

The Committee "endorsed staff advice to continue front-loading purchases under the LSAP programme, while maintaining flexibility to adjust purchases as market conditions dictate".

Members agreed the outlook for inflation and employment remained "subdued" and the "balance of risks" remained to the "downside".

They noted that while some Government support like the wage subsidy is starting to come off, "monetary policy will need to provide significant economic support for a long time to come".

Here is the Committee's statement in full: 

The Monetary Policy Committee agreed to continue with the Large Scale Asset Purchase (LSAP) Programme up to $100 billion. This action is necessary to further lower household and business borrowing rates in order to achieve the Committee’s inflation and employment remit. The Official Cash Rate (OCR) is being held at 0.25 percent in accordance with the guidance issued on 16 March.

Reflecting the possible need for further monetary stimulus, the Committee noted the progress being made on the Bank’s ability to deploy additional monetary instruments. The instruments include a Funding for Lending Programme (FLP), a negative OCR, and purchases of foreign assets. The Committee agreed that these instruments can be mutually supportive in bolstering economic activity. Members also agreed that the alternative instruments can be deployed independently, and noted that the FLP would be ready before the end of this calendar year.

Economic information available since the August Monetary Policy Statement, both international and domestic, has confirmed the level of economic activity remains significantly below that experienced prior to the COVID-19 economic disruption. The ongoing virus-led activity restrictions – most notably in Auckland – had also continued to dampen economic activity, and business and consumer confidence.

Any significant change in the global and domestic economic outlook remain dependent on the containment of the virus, which is highly uncertain. International border restrictions will continue to significantly curtail migration and tourism, and lead to the activity outlook being uneven across industries and regions. Commodity prices for New Zealand’s exports remain robust, but this has been partly offset by the New Zealand dollar exchange rate moderating the return to local export producers.

Ongoing support for domestic economic activity is being provided through significant government spending on business assistance and household income support. This will be accompanied by a rising level of government investment. However, the removal of temporary support policies has commenced. For example, the Wage Subsidy scheme is now closed to new entrants.

In line with the weak underlying international and domestic economic conditions, the Committee expects a rise in unemployment and an increase in firm closures, as resource reallocation continues. Members agreed that monetary policy will need to provide significant economic support for a long time to come to meet the inflation and employment remit, and promote financial stability. They also agreed they are prepared to provide additional stimulus.

Summary record of meeting

The Monetary Policy Committee discussed international and domestic economic and financial market developments. The Committee noted that global economic activity had increased in recent months as social restrictions in some regions had eased, and that the consensus outlook was for a partial recovery in the level of economic activity. Members agreed that the balance of risks to the global economic outlook remained to the downside. The Committee noted that cases of COVID-19 were growing and social restrictions were being reintroduced in some regions of the world, including some areas where the virus had previously appeared to have been reasonably well contained. Members noted that while global monetary and fiscal easing has supported financial and economic conditions, there was a risk that the recent recovery in international activity could stall or reverse if policy stimulus was withdrawn prematurely.

The Committee noted that the August outbreak of COVID-19 in New Zealand appeared to now be contained. Restrictions imposed to contain the virus had constrained economic activity, but were being relaxed. Some members observed that the outbreak had dented confidence, as firms and households are wary of a future outbreak with a subsequent reduction in activity and spending.

The Committee noted the historically unprecedented contraction in economic activity in the June quarter, as measured by the national accounts. The size of the contraction had been smaller than earlier expectations. The Committee noted that some more timely measures of activity had recovered quickly following the easing of restrictions after the initial lockdown, but had dipped again as restrictions were re-introduced, particularly in Auckland. The Committee agreed that the pandemic and associated travel restrictions could have a significant long-term negative impact on the economy, with lower potential growth as resources were gradually redeployed within and between industries. Some members noted that it is also harder to estimate what the maximum sustainable level of employment is under these conditions.

The Committee discussed the recent strength in the housing market. House prices had risen over recent months, in contrast to the Reserve Bank’s baseline scenario which had assumed a decline. Some members noted that economic activity in New Zealand has historically been closely correlated with changes in household wealth, and that a stronger housing market may indicate a stronger recovery in consumer spending and residential construction if sustained. However, other members noted that low population growth and rising unemployment are expected to constrain further house price increases.

Members agreed that the outlook for inflation and employment remained subdued. Members discussed the balance of risks, and agreed that they remained to the downside. There is substantial uncertainty about the future spread of COVID-19 both domestically and globally, and how economic, health, and social activity will adapt.

The Committee discussed the effects of monetary policy easing measures taken so far. Members agreed that the reductions in the OCR, forward guidance, and Large Scale Asset Purchase (LSAP) programme had contributed to lower wholesale, household, and business interest rates, and had kept the exchange rate lower than otherwise. Members noted that the expansion and front-loading of the LSAP programme after the August Statement had contributed to lower government bond yields. They also noted that market participants now believed that it was likely the OCR would be reduced below zero next year, and that this had also contributed to lower wholesale interest rates. The Committee expected lenders to continue to pass through these reductions in wholesale rates to household and business borrowing rates over time.

The Committee reaffirmed that a Funding for Lending Programme (FLP), a lower or negative OCR, purchases of foreign assets, and interest rate swaps remain under consideration. The Committee maintained its view as expressed in the August Statement that a package of an FLP and a lower or negative OCR could provide an effective way to deliver additional monetary stimulus.

The Committee discussed the sequencing of deployment of the components of the package. Members noted staff advice that deploying an FLP before the forward guidance period for holding the OCR ends could provide additional stimulus to the economy sooner. Having an FLP in place earlier would provide certainty to financial institutions planning their funding needs, and speed up the transmission of the programme by allowing banks to replace funding as it matures over time.

The Committee agreed that providing term funding at rates near the OCR via an FLP would lower the financial system’s funding costs, and therefore borrowing costs for firms and households, and support the availability of credit to the economy. The effectiveness of the programme would be influenced by the degree to which financial institutions passed on their funding cost declines to their customers. Members agreed that they preferred to launch an FLP before the end of 2020.

The Committee noted that the banking system is on track to be operationally prepared for negative interest rates by year end. Members agreed with the previous assessment that a lower OCR would be complementary to its other monetary policy tools, and that it was prepared to lower the OCR to provide additional stimulus if required.

The Committee endorsed staff advice to continue front-loading purchases under the LSAP programme, while maintaining flexibility to adjust purchases as market conditions dictate.

The Committee discussed the appropriate settings for monetary policy. It agreed that further monetary stimulus may be needed in order to achieve its remit objectives. The Committee agreed that a severe and prolonged economic downturn would make it difficult to achieve its inflation and employment objectives, and at the same time would pose a material risk to financial stability. Providing sufficient monetary stimulus would therefore both help achieve the Committee’s remit objectives, and promote financial stability.

On Wednesday 23 September, the Committee reached a consensus to:

  • hold the OCR at 0.25 percent, in accordance with the guidance issued on 16 March;
  • maintain the existing LSAP programme of a maximum of $100b by June 2022; and
  • direct the Bank to prepare to have an FLP ready to deploy before the end of this calendar year. Details on the design of the programme would be agreed and published ahead of deployment.

Attendees:
Reserve Bank staff: Adrian Orr, Geoff Bascand, Christian Hawkesby, Yuong Ha
External: Bob Buckle, Peter Harris, Caroline Saunders
Observer: Tim Ng
Secretary: Ross Kendall

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180 Comments

54
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"The Monetary Policy Committee agreed to continue with the Large Scale Asset Purchase (LSAP) Programme up to $100 billion". This action is necessary to save the debt fueled and keep the house price increases going.

What a load of BS. Lets have the reset of houses prices now and the debt fueled can take their medicine that has been a long time coming. No mention of deposit guarantee scheme for conservative savers or retirees who are earning zero on deposits but are put at extreme risk of an OBR event in the future.

Orr MUST GO!

54
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Rewarding bad behaviour (borrow as much as you possibly can and invest it all in a single asset) and punishing good behaviour (living within your means, saving for a good sized deposit, not putting it all on red on the roulette table). 2020 is the year when we've finally reached a complete upside down world. Nothing makes sense anymore.

I believe this is the logical next development in a finite planet of diminishing returns, full to the brim with rapacious primates who have an infinite ability to create money.

Inflation has been on life support for some time, and in the last stages of life. It's dying because the gains from increased costs have been concentrated into the hands of the few.

The honesty is those controlling the (essentially private) central bank system have used inflation as a means of growing their business, at the expense of most others. Politicians are just pawns in this game, and this no more obvious than in the banking sector where a large number of ex politicians have been given jobs for favours they have given their business. Instead of being given jobs, these ex politicians should be going to jail. Inflation has masked their poor management, and just kicked state bankruptcy down to the next generation.

The big reset is coming, and its going to be ugly, but lets get it over with so society can change its focus, from winner take all, to building happy healthy communities.

34
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Mr Orr will go down in history as the worst NZ has seen.
JA clearly needs some more cash.

15
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The Government should stop collecting tax. Orr can just print whatever we need as a country. Give everyone a debit card and spend up.
As there is no plan to pay it back its DEFACTO MMT!

Adrian Orr simply has to go. To whom and how can I express my concern about this guys intentions and capability?

RBNZ's website has a Contact Us page. You could provide suggestions directly.

There is truth to what you said, but tax ensures demand for Orr's funny money.

Hot of the press....Wealth tax 'a bottom line' for a Greens-Labour government: Genter
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=123...
I think Julie Anne Genter is worse. .
The Greens election policies include a plan to make Kiwis with a net-worth greater than $1 million, pay 1 per cent of their wealth to the government as a tax.
Those worth more than $2m would pay out 2 per cent of their wealth as tax. Genter defended the wealth tax, saying it would only affect the wealthiest 6 per cent of Kiwis.

Interesting about ‘only 6%‘ - I think Genter called it ‘a tiny minority’. Isn’t 6% the Greens’ current polling? So, a retired widow in Auckland with an average house, a car, jewellery and a few bits and bobs worth say 200k and a 500k term deposit accrued through a lifetime of hard work will get virtually no income and have to pay $7000 plus a year in wealth tax, close on half of her super. Plus have to fork out a grand for an accountant.
The Greens think nothing of persecuting the elderly, but happily give $12m to a private school! What a bunch of hypocrites.

If the retired widow is paying 7000 per year she has a net worth of 1.7 million.

Paying 0.04% of your net worth for the use of all the government services the widow will still be using despite not paying anything in PAYE doesn't seem like persecution.

They take PAYE effectively out of NZ Super. So she will be paying it!

Nonsense don't blame these guys, blame financially illiteracy. Dangle keys to a Ferrari to those financially inept long enough and they will always bite. Just keep dropping the payments. Want always wins over common sense. Our financial system is based on it.

Orr never mentions how he will unwind the money printing or what will happen if inflation goes beyond his 2% target. I suspect they will just change the measure of the 2% like the FED and average it over a number of years. Got to keep the housing market running hot at all costs!

"An OCR cut when you are not having an OCR cut."

While I would be put in the property camp, this announcement troubles me.
Why the need to take this action or even signal it? The housing market is currently hot - both nationally and Auckland median prices are up 16% YOY - and further stimulus is not required. Reports - such as Treasury - suggest that the impact on GDP is not as severe as anticipated.
Current conditions suggest a high degree of economic stability under the constraints of the current Covid environment.
As RBNZ is going to put downward pressure on mortgage interest rates, the short term prospects for FHB is seemingly that a bubble burst in the short term is unlikely.
However, I agree with those that house prices cannot continue to rise at the current rate without increasing risk of a bubble burst somewhere down the track and that will lead to disastrously economic instability.
As this is going to stimulate house demand and prices, the losers here are potential FHB who procrastinate (this is not promoting FOMO but rather reality).
Those with cash and without debt (including no mortgage) such as boomers are also going to be losers as term deposit rates fall further.
The "Covid winners" - those who bought seven or eight years ago - are the big winners as they have seen considerable rise in the value of their house along with mortgage rates halving. They will not be posting negative comments!
Retired Poppy - you were so, so wrong.

My expectation is the Funding for lending program is aimed at SME's as with the Australian version.

The heat in the property market is savings looking for a return, developers and soon to be returning ex-pats. The RBNZ won't care if it peels of another 15% by the end of the year - they will focus on supporting SME's and jobs.

Te Kooti
RBNZ opening paragraph "This action is necessary to further lower household and business borrowing rates . . . "
Aimed at both housing and businesses.

Yes. I think it has to do with their (the RBNZ) employment target. They want all those who find themselves newly unemployed and who own-their-own home to remortgage the property; take out a business loan, and become effectively self-employed (i.e., start up a SME).

In other words, they want those with unrealised capital gains to 'cash them in' on a start-up company.

I wish a tiny part of that $100 billion will come my way. Checking my bank account daily. Don't disappoint me, Orr.
Otherwise, I am voting ACT. Who will abolish RBNZ, beware.

31
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So what exactly is the point of stimulating lending, when most of it goes into housing?

"Some members noted that economic activity in New Zealand has historically been closely correlated with changes in household wealth, and that a stronger housing market may indicate a stronger recovery in consumer spending and residential construction if sustained." - Are you kidding me?
Household wealth might increase on paper, but it does sweet f***all to the economy if it's locked in the asset (owner occupied house, for example).
Also, if people have to borrow more to buy the same house, thus increasing their mortgage repayments and decreasing their funds (larger deposit required), how exactly does that put more money into the people's pockets to buy stuff?

17
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Exactly - trading the same asset back and forth for every increasing sums doesn't create wealth, just debt.

22
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Selling houses among ourselves for ever increasing prices wont make us rich. It's madness.

16
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Yip its the road to long term financial misery.

Michael Reddell is, as always, right on point about the ridiculous correlation of stronger house prices with - well, something politically desirable if not economically obvious to the rest of us plebs.....

He fingers (sigh) stupid land-use policies, decades of poor to absent productivity and so on - the usual suspects; well traversed on Interest's august pages. And points to the consequences - inequality through the roof, waiting lists for State houses quadrupled in three years, the effect on young minds and mental states as they contemplate their futures, and the sad fact that there is zero political will to change anything.

'sad fact that there is zero political will to change anything.'

Depressingly so. The only parties that have some policy solutions on what Michael Riddell and others know, is TOP and ACT.

Certainly highlights that it's hard for Jacinda and crew to address poverty when Orr and the RBNZ are actively worsening it.

51
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There should be rioting on the streets by the young future tax payers of this country.

Negative wholesale rates are a government (taxpayer) backed subsidy to the banking industry to lend and support asset prices for those who already hold assets.

Those young hopefuls will carry the can. What a shambles. Time to get into the pitchfork sharpening business I reckon.

12
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My French partner can’t understand why we don’t protest more here in NZ.

We used to. Back in 1986.... and in 81 with the springbok tour, basically low level civil war.
Why has it subsided so much in the last 30 years? Why have people become so apathetic?

Maybe life just isn't as bad as that made out by many interest commenters.

The echo chamber of negativity and bitterness

This is a massive part of the problem. Look at all the media coverage the public outcry over the hoarding toilet paper received. Many recognized the wrongness of forcing others to go without, when there was more than enough for all, if only people would consider others and take just what they actually needed. Yet this is not being kept front and center in our media. It is barely being talked about at all.

Many people do not know or truly understand exactly what is being done to them. Plenty still have hope that they can make it across the line in time and stand on the 'right' side of this mess - when in reality they will be competing with all the rest, just to be the least destitute of the lot. Those with the power to inform and change our trajectory, do not care to. I hardly have words for the anger I feel over this.

It's funny because I have never actually despised anyone in the RBNZ before now?

In the past my view was that central banks have a utilitarian view towards the economy. Now I doubt that this is a true statement. It would appear that its all about asset prices, not the economy, or asset prices and debt growth are the economy. What they have built is too big to fail, yet if it doesn't fail then we have stagnation and stagnation under a weight of debt = misery.

We had marches for BLM and Climate Change. Those are two areas of greater awareness.

The problem is Kiwi youth do not quite have awareness of just how badly they are being screwed through wealth being transferred away from them and to property owners.

16
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Jenee can you ask Adrian Orr where is the deposit guarantee scheme? As the economy worsens their actions are pushing house prices to an extreme level and if it turns into a great big turd houses will have negative equity in big numbers and deposit holders are at an extreme risk of an OBR event and for this increased risk deposit holders are receiving zero return. That does not make any sense?

Why does he not speak up and say his thoughts on what deposit holders are facing? All his statements are directed towards saving the debt fueled.

Don't keep money in the bank then?

With the AML rules transacting in cash is becoming harder and harder. If you have cash you are considered a criminal. Banks have ditched safety deposit boxes. If you try and withdraw large sums of cash the banks create such a palaver. Try buying property that is not debt fueled and again they want to trace the money back to 80's if that's how long you have had it. One of the reasons is true negative interest rates wont work if you can simply take it all out. The IMF have a paper on this IMF: Cashing In: How to Make Negative Interest Rates Work
https://blogs.imf.org/2019/02/05/cashing-in-how-to-make-negative-interes...

Really? Because we bought a house with no debt in 2019 and no one batted an eyelid. No one has asked to trace it.

No one treated us like a criminal. Probably because we aren't criminals.

Using cash to transact is cash in a bag not direct crediting it! Also try buying or selling a commercial building with Bayleys or Colliers and they have extensive AML compliance for you to meet to prove the source of funds. Even going back many years where the property has been owned for 20 years. They even get you to pay for an outsourced organization to prepare it all. Try paying a top law firm for services and you will see the level of AML compliance you have meet. Try moving large sums of cash between say ASB or ANZ to Kiwibank and again the AML compliance at kiwibank is a nightmare. Any cash in trusts is another level. Try opening a share trading account with a family trust and they want proof of source of funds going back years. Try buying a new car with cash and you will find the dealer will need to report the transaction. If you go to ANZ lambton Quay and want to take out a 100k the manager comes out and wants to discuss what the money is for and why are you taking it in cash. I have nothing to hide but the idea that cash can be easily transacted is BS.

The IMF have a paper on this IMF: Cashing In: How to Make Negative Interest Rates Work
https://blogs.imf.org/2019/02/05/cashing-in-how-to-make-negative-interes...

OC....Simply untrue. I move 6 figure sums between banks most years as in my experience, being a new TD rather than a roll over is the only way to get best negotiated TD rates. Never been asked where the money came from and have no work history since 1997. Moved a 6 figure sum from BNZ to a brand new TSB account yesterday. Won't spend the 1.25% interest all at once! Name, address, passport and occupation were the only 4 requirements. Easy peasy.

Simply not true? This because of your ONE experience moving from bank to the next. Move a trust accounts with significant sums and you get extensive requests. Have you done this? Have you bought or sold any commercial property say $3-5m plus held by a trust or being bought by a trust. Have you withdrawn 6 figure deposit in cash? Have you taken your 6 figure deposit in cash to buy a property?

Has your trust or company engage one of the major law firms for services. Extensive AML paper work...

Its simply not true there are extensive AML requirements to be met....

The AML rules apply to banks and real estate agents and others.

Any how AML rules https://www.justice.govt.nz/justice-sector-policy/key-initiatives/aml-cf...
On an ongoing basis, you’ll have to:

verify the identity of clients
verify the identity of purchasers who pay cash deposits of $10,000 or more. In some circumstances (such as if they represent a company or trust), you may also need to ask for information about where money came from and the other people involved. For more information about verifying customers’ identities, see: Information for customers about AML/CFT laws
submit a Prescribed Transaction Report to the Police Financial Intelligence Unit (FIU) if a client wants to conduct a transaction in cash that is $10,000 or more, or an international wire transfer of $1000 or more
monitor customers’ accounts to identify potential warning signs of money laundering and terrorism financing. You must report any suspicious transactions or activity to the FIU. For more information, see: Reporting suspicious activities
regularly review your risk assessment and compliance programme
have your risk assessment and compliance programme audited regularly
submit an annual report to the Department of Internal Affairs, which will supervise your sector.

My post said every year, which is specifically the last 6 years. So no idea why you say one experience? Your original post said try moving large amounts of money from ANZ to Kiwi bank. Guess what, been there, done that. True, Kiwi Bank are one of the most anal, asking about gambling, laundering, prostitution, income etc and requiring completion of forms but never had to put in writing or show where the money came from, which is scary considering they saw my passport which shows I lived in Thailand, Macau, Cambodia and the USA for the last 20+ years! Have transferred funds between all major Aust & NZ banks and only minor issue was TSB refusing to open an account for me 3 years ago when I stated I may derive income from gambling (poker). TSB did however open a nice new account for me yesterday without even asking one question or me filling out even one form. Will not even address most of your other stuff as it doesn't seem relevant. OFC you can't walk into a bank with a suitcase full of cash, but contrary to what you say, transferring even 7 figure amounts between banks in NZ is, from many personal experiences is, as I said, easy peezy! FYI paying 800K cash for a NZ house thru a lawyer this year was also just as easy. Just cos all these AML regs are there don't mean they are followed.

Headline today Banks won't accept cash from customer trying to deposit money into friend's account
https://www.stuff.co.nz/business/money/122835522/banks-wont-accept-cash-...
ASB retail banking executive general manager Craig Sims said the bank encouraged people to use electronic banking to reduce face-to-face contact and for banks’ “regulatory purposes”.

“When it comes to third party deposits we do encourage customers of other banks to transfer funds electronically via online banking or automatic payment to ASB customers’ accounts,” Sims said.

Ginganinja ...You removed a number of paragraphs from your reply. Is this because you realized direct crediting is not paying in cash....
Any how AML rules https://www.justice.govt.nz/justice-sector-policy/key-initiatives/aml-cf...
On an ongoing basis, you’ll have to:

verify the identity of clients
verify the identity of purchasers who pay cash deposits of $10,000 or more. In some circumstances (such as if they represent a company or trust), you may also need to ask for information about where money came from and the other people involved. For more information about verifying customers’ identities, see: Information for customers about AML/CFT laws
submit a Prescribed Transaction Report to the Police Financial Intelligence Unit (FIU) if a client wants to conduct a transaction in cash that is $10,000 or more, or an international wire transfer of $1000 or more
monitor customers’ accounts to identify potential warning signs of money laundering and terrorism financing. You must report any suspicious transactions or activity to the FIU. For more information, see: Reporting suspicious activities
regularly review your risk assessment and compliance programme
have your risk assessment and compliance programme audited regularly
submit an annual report to the Department of Internal Affairs, which will supervise your sector.

All that AML/CFT stuff is a bit of a waste of time really. Any serious launderer or terrorist just uses the Hawala system these days. The Asians have a number of their own Chinese hawala type systems, the generic name translating into English as "flying money". A popular example is to "buy" 11 watches or rings, separately, in Macau or HK for say $100K by credit card then immediately sell them back for $90K cash (ever wondered how so many jewelry shops per sq km in Macau survive?) or buy into a poker game for $100K and cash out for 90K "profit" picking up a receipt from the casino. Voila.
And even in the USA you can deposit thousands in cash into the same US bank a few times a week as long as you do not exceed 10K per day, no questions asked. And we haven't even considered the biggest of em all, crypto. Again ezy peezy.

100% agree. For all the AML BS they are putting ordinary people through they didn't catch the ChCh gunman and he was sending money to extremists offshore!
I say it is to reduce transacting in cash. Negative rates wont work fully otherwise.

Same here just this week no problem. The problem is the banks are not lending money. Doesn't matter if mortgage rates are only 1% if the banks will not give you a loan.

There is no mention of Bitcoin or other digital currencies anywhere in that article. Why would I hold their digital shit with negative rates when i can just use a bitcoin backed card? Serious oversite on their part.

Charlie Munger: Bitcoin Is Worthless Artificial Gold | CNBC https://www.youtube.com/watch?v=NBVDqAHQ4-M

Which BTC backed card do you use in NZ?

If someone has a million dollars in cash in teh bank, and I am sure many people do, including many retired people who are cashed up, then what is stopping them going to a bank and asking to withdraw it all? If interest rates fall to almost nothing, then the risk vs reward for lending it to the bank, may mean some people will just a buy a safe or maybe a safety deposit box at a bank to store it. What is stopping any of that happening?

There are no safety deposit boxes at banks. They got rid of them a number of years ago

23
up

I have seen these but we can print $100 billion and bring in negative interest rates and pay deposit holders zero but still a lot of work is required to create a deposit holder scheme. Total BS there is no will to create one.

Reality it won't be Orrs problem... he'll be on a beach sucking down mojitos... pass the problem he created onto the next central bank leader who has a tiny shovel and mountain of debt to deal with

When it does come in, it may only be 50k per bank, as that was the initial plan. As NZ doesn't have many banks, those retired people with lots of saving for their retirement may not have anywhere safe to spread all of their money.
I was speaking to someone, and they were thinking of taking their money out of the bank and buying gold, and buying a good safe. This is a regular educated person who has saved for their retirement, but lost some money in finance companies. It is pretty bad if they don't feel safe to keep their savings in our current baking system . Will banks fail in 2021- 2022 fail , like finance companies did back in 2007-9?. It is often those that have saved and not frittered their money away that are worst affected when things go bad. Home owners will still have their homes if banks fail.

without the wealth in housing, NZ would be a poor country.

23
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Wrong. Without the wealth in housing, the same money would be "in the economy" (or at least people wouldn't owe $500k+ per family) and people would spend money on all sorts of goods and services.

Without the wealth in housing, the same money would be "in the economy"

Wrong. Mortgage lending is the biggest source of 'money creation' for the NZ economy as it relates to h'holds.

wrong. Money creation is not wealth.

Debt is wealth is money

10
up

Intentionally ignoring the second half of my comment?
Family 'A' owns their $500k house with 0 mortgage on it. Family 'B' owns a $1mn house with $500k mortgage on it.
Assuming that A and B's income are the same, which family is more likely to spend more money on goods & services?

Good question. Family B will feel 'richer' so we can assume that they will be prepared to spend more than Family A on a new car. This is a hypothesis. Not a fact.

To be fair, I don't know the answer either. But family 'A' will have an extra $2700 per month available to them that 'B' don't have. I personally would be much more likely to buy a nicer car, a new kayak or fishing gear if I had that extra.

“I personally would be much more likely to buy a nicer car, a new kayak or fishing gear if I had that extra.“

Why am I not surprised grasshopper, this sort of thinking is why you’re in the position of having to complain and blame about Orr

You're so obsessed with me that you even came up with a nickname I see. That's adorable.

Yeah like a mosquito in a tent :)
Thought you were meant to be more like a court jester...

You keep mistaking, I can just assume willingly, two concepts which are far from being the same such as debt and money which shows a complete lack of economic knowledge from your side.

You really have a very bad concept of this country if you cannot see beyond speculative economy.

"Without the wealth in housing, NZ would be rich in productivity" there I fixed it, you're welcome!

Fully support this move. Makes good sense.

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Come on Mr Orr your not fooling anyone by using that name.

11
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Nah, he's just another max leverage interest only housing speculator.. anything that makes money cheaper or gooses the "value" of his properties so he can leverage another one is all good in his books.

11
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Cannot we kick these people out already? They keep making the most relevant economic decisions without any democratic legitimacy.

..and yet he leaders debate won't go near it. A side show of trivia.

10
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James Shaw raised the issue of central bank tactics worsening wealth inequality in NZ and putting asset prices out of sync with the economic growth trajectory in this country at last night's ASB Great Debate.

The host hastily moved the debate along to the next topic, not to upset the debate organisers.

Vote Green.

However, on Wednesday the Committee agreed it could try to speed up the process of lowering interest rates even further by deploying the FLP first.

“Members noted staff advice that deploying an FLP before the forward guidance period for holding the OCR ends could provide additional stimulus to the economy sooner,” it said.

Low rates do not signify stimulus nor abundant liquidity, they often describe just this sort of monetary tightness and chaos. Abundant liquidity means everyone gets funding; lack of liquidity, which does show up in low rates, means that money dealers are being prohibitively discriminating.

Low rates are not, repeat, NOT STIMULUS. They are the signal that "stimulus" doesn't work. If you have to keep doing something over and over, year after year, is that a sign of success? Nope. Bonds are kind enough to identify the cause, too. Tight money.

Low interest rates aren’t a central bank providing accommodation, they are instead its worst nightmare being shoved right back in their face. Well, our worst nightmare because for one thing despite repeated failures, rates that never rise testifying to that failure, central bankers are never held to account.

To correct this view, Friedman pointed out the basic, non-trivial distinction between a liquidity effect and an income effect. Low rates can be stimulative in the short run (the liquidity effect), but over the long run their persistence means something far different. A yield curve is supposed to be upward sloping given the core time value of money and investing. That arises from opportunity cost, meaning the more plentiful the opportunities the greater the time value and the steeper the curve (the income effect). Yield and/or money curves (the eurodollar curve and even the history of the OIS curve) that collapse and remain that way unambiguously demonstrate that "stimulus" deserves only the quotation marks.

Makes you want to rush our and buy bitcoin and or precious metals as a hedge to when all this debt across the world comes home to roost. We have been led by a blind man into a dead end. There are 60 metre smooth high walls and the electric gate is just about to close behind us. No way out, no escape.

Makes you want to rush our and buy bitcoin and or precious metals as a hedge to when all this debt across the world comes home to roost.

Personally, I believe a bit of gold in any portfolio makes sense. I made that decision back on 2005 through the GLD ETF. Finally sold this year and transferred it all to Perth Mint tokens. Discussions around the water cooler gets me suspicious looks if I talk about gold. Best to keep your mouth shut and listen to others so you understand what they're thinking.

As for Bitcoin, I own it, but that's another controversial topic. The way things are heading, it's good to know you're one of the 'early adopters' should the BTC price moon race occur, which is looking more likely as time passes.

Why did you sell your holdings in the Physical Gold ETF, to transfer it all to Perth Mint tokens ? Just asking, as I have a bit of money invested in precious metals ETF's.

JC may not read this thread again but if you do, it most likely because there is/will be concern about paper claims being made against the store value of physical gold. The ETF may just act like fiat currency and if everyone runs to check out at the same time your holding may not be worth what you think it is. At least if you have physical in your possession, you no longer have that concern.

Lot of crybabies commenting, instead of adapting, learning, innovating or working smarter
Darwinian evolution isn’t about survival of the fittest, it’s survival of the best adaptors.
Good luck to all

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Those very qualities you have just described are being killed by this madness. T.

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Yip - my conversations with property investors and their inability to feel a sense of altruism towards others, makes them seem more like animals than humans - i.e. their brains haven't evolved enough to feel a sense of compassion for others, but can only see $$ for themselves. Would appear they're using lower parts of their brains (limbic vs pre-frontal cortex) - focusing on the self vs the collective.

If they want to make money at the expense of others - they should do that in the sharemarkets or at the casino. Not a housing market where people want to create homes and have security and feel like they're part of society.

Agree 100%. There are many investment opportunities that provide potentially high returns in the medium-long term, without taking away opportunities for young families to establish in a home.
But the ultimate culprit is the RBNZ, with its destructive and utterly irresponsible loose money policies, and the successive governments that did not have the balls to heavily tax speculative, parasitic housing investments. They have enabled this state of affairs to develop.
I am calling for the immediate removal of Orr.

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"innovating or working smarter"

Hilarious.

Oh god.... where do I even start?
I'll be brief. By your logic we should all just have 50 kids each and that's it, evolutionary goals achieved.

Without the weak, you wouldn't be the fittest..
Think of your tenants, they are the weak and supporting you!

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Landlords in my view are probably the worst business people I know as all they appear to do is whinge about their customers and expect them to pay more money each year.

Imagine doing that in any other services business - complain about how crap your customers are and then put up the prices. Its actually unreal.

Yes, definitely some like that
More than there should be, mainly Ma and Pa who don’t view it as a business

The local Pack and Save, New World and Countdown do this each year. Funny thing is everyone keeps going back for more!

Fake news- the price of packaged foods have hardly moved in the last 5 years.

Do you actually buy food from supermarket yourself? Read below from Stats NZ. I think you have no idea and this is outside your circle of competence......
Food prices increased 3.5 percent in the year ended January 2020.

In January 2020 compared with January 2019:
fruit and vegetable prices increased 2.7 percent
meat, poultry, and fish prices increased 6.0 percent
grocery food prices increased 2.3 percent
non-alcoholic beverage prices increased 5.3 percent
restaurant meals and ready-to-eat food prices increased 3.4 percent.

https://www.stats.govt.nz/information-releases/food-price-index-january-....

Surely that suggests we need to change how we measure inflation so we can continue inflating our housing portfolios!

Incorrect, it’s a symbiotic relationship
In fact, my tenants often go out of their way to thank me for being so fair, decent and understanding.
I care for them a lot. This isn’t common admittedly, I think it’s good business sense and basic decency. It’s unexpectedly payed more dividends than I thought
I’ve helped quite a few tenants into their first home

Stunning and brave

Did you copy and paste this from The Man 2 ?

I am sure your tenants will save you when we finally have a revolution.

Its interesting to see how far ones brain has evolved when only seeing benefits for oneself and miss the interdependent nature of 'humanity'. We could of course just use the lower parts of our brains and act like adaptive animals if that is the level of evolution that you suggest Darwin implies - act in self interest only - ignoring that the evolution of the human brain (but not the animal) to see beyond the self and has the ability to feel a sense of altuism towards others? Its the size/development/evolution of the higher parts of our brains (prefrontal cortex etc) that allows that - something animals don't have (for the most part).

We could of course adapt to provide affordable housing for people - how would that sound? Removing financial stress from their lives - improving society and peoples mental well-being.

Oh but then how would property speculators make money? Does that mean they are acting more like animals than humans - i.e. working for the self vs humanity and their brains haven't evolved? Ignoring others plight. Not acting with a sense of altruism. I won't pass judgement as that would be using a lower part of my brain. But you might be able to see the bigger picture. If not I can suggest some reading.

Humans ARE animals
We’ve evolved to what we are by being altruistic and sociable
This is a finance website, not a cuddle and hugs website

Hopefully evolved animals - and evolved means using the higher parts of our brains that allows us to feel the pain and suffering of others. Something animals lack.

Yes and finance/economics extends to human psychology - I.e how we think and interact.

Depending on how much altruism you feel for others perhaps is an indication of how much/little a person has evolved (from being an animal to being ‘human’).

The book by Mathieu Ricard (Altruism) is a good if you want to litmus rest your own level of evolution.

Independent Observer
Why so upset?
You know this is all going to come crashing down and it is just delaying the inevitable. Both Shiller and you say so.
Relax, getting upset about RBNZ just shows a lack of confidence in that. :)

Nice troll P8 - but come on, you can do better than that!

Have you read the book? Or are you simply shooting arrows in a room with the lights turned off?

IO
Cheers - just stirring.
I’m moving slightly (just “slightly” mind you) towards your view.
RBNZ statement does concern me as to the effect on house prices and affordability - so consequently I do see increasing risk of a potential collapse.
Interesting RBNZ announcement notes that house price increases have been contrary to their estimates of falling prices and yet they then go and announce this putting further upward pressure.
I don’t need to read Shiller - increasingly over inflated property prices are sufficient to concern me.
My often made comment to FHB about being prudent by paying down the mortgage is increasingly more-so relevant.

You are right MadMax, we should talk to our banks about innovation. They have been doing the same for a hundred years and the only reason they are still around is because they keep changing the rules.

Google fintech

You clearly have no understanding of Darwinian evolution. It's about biological adaptations at the species level.

You also don't seem to have any understanding of politics. Political decisions like this aren't things that just happen, that we need to adapt to, like hurricanes or earthquakes. They are choices that are made by the people in power. Getting angry is the first step to change.

I’m an investor. Getting angry or emotional is idiotic imho

Of course you would say that - people getting angry is a risk to you. But if you're claiming that if the RBNZ/government spent years taking action (or inaction( to ensure that despite years of education and hard work you were going to end up financially screwed you would not feel the slightest bit angry about it I suggest you're either lying or delusional.

In the natural world and in a truly capitalist system the fittest do well and the weak do badly but in times of strife the fittest struggle and some survive but the weakest die. New fitter species (new businesses have a chance to fill the gaps). Not under Orrs watch. He props up every incumbent and blocks any newcomers from having a chance. He is the enemy of the young and poor and hero of the old and rich. At least he admits it I suppose.

Haha exactly - we're now into the business of fake economies, zombie companies and ludicrous asset prices (based against any fundamental like P/E or price vs income, or price vs gdp). Its not survival of the fittest, but more saving the weakest (who think they're the strongest) from being over leveraged. The world has gone mad and everything is back to front or often the opposite of what it appears or what people tell you.

It's all a bit 14th century AD. Plague, corrupt power, relics, magic, deception, demons, alchemy...

You can imagine people writing about this period 10 or 100 years from now. 'The silly fools thoughts they could print money to avoid their debt problems'. Laughing around the water cooler, 'they thoughts they could create money on a computer to save them from paying each others debts and a magician called a central banker just purchased all the bad debts because there was too much of it!' It does sound completely outrageous.

"Getting angry or emotional is idiotic " - https://psychcentral.com/disorders/schizoid-personality-disorder/

The context was clearly as an investor
Don’t misconstrue things on purpose, it’s childish

This website’s readership is 95% sookie babas. Low acumen, conspiratorial, anti free market.

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How dare you. These are real people's lives - hardworking people who have slaved and saved their guts out for years- whose futures are being ruined by this. Go away - and I would say that in much stronger terms if I could.

What the RBNZ is doing these days is totally against the free market but don't think their supporters account for such large percentage ;)

Exactly the housing market is no longer a free market. Unfortunately I recently came to this conclusion when true price discovery got killed off by this government so I bought a house with the Labour guarantee that the price will not go down.

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The arrogance of thinking this is a free market. These people actually think they are so superior and are amazing investors. Orr is protecting this type of being?

What on earth is a 'Sookie baba'?

New name, same old spots I see.

Mad Max
I agree.
I have already posted that the move by RBNZ concerns me, however one can not change or influence that.
The reality is that while we may not like the RBNZ decisions we need to accept that we cannot influence or change it, need to question the implications of it for ourselves, and make the most of it.
I have also previously posted regarding one of my life's lessons. Talking with a government contractor who attended a meeting where a change in policy was being announced. His comment was that other contractors were wasting their time moaning, whereas he was accepting of the fait accompli and looked at the implications. He is very successful and remains the only contractor in the Bay.
If I was a potential FHB, the implications are that there is likely to be rising housing price and falling mortgage rates. What does one do to make the most of it?

> however one can not change or influence that

Why not? The RBNZ isn't a law of nature, its established by an act of parliament.
No reason the act can't be repealed or amended because as far as I'm concerned the RBNZ is doing more harm than good at this point.

lowercase
So you personally are capable of repelling the Act.
Impressive!

In your comment above you acknowledge:
"that house prices cannot continue to rise at the current rate without increasing risk of a bubble burst somewhere down the track and that will lead to disastrously economic instability."

So some concession that the 'greater fool theory' is in play here.
Sure, this might pay off in the short term for some and in a year or two you might still be thumbing your nose about it being the most 'rational' course in hindsight.
I'm just not sure how you can be comfortable advocating this to FHB when, by your own admission, you know this to be an unsustainable policy course that, if it continues, is inevitably going to severely burn some, particularly young, people at some point.
Ad infinitum is not an option for what is happening now.

Worse, advocating this only extends the pretend for longer but makes the consequences ever worse for who ever ends up carrying the can at the end.
And there will be an end.

The best course here is for ever more and ever louder voices to demand it stop now.

cmat
It seems very, very likely in the short term house prices are going to increase.
The likelihood of a bubble burst is a risk but less certain.
My comments to FHB are usually qualified about being prudent hence I see no issue at all.
I lived through the share market rise and 1987 crash - I was prudent at that time, was not adversely affected, and that reflects my view to investment.
I have also commented that short term fluctuations in the housing market are irrelevant provided one can service their mortgage.
At the moment, it is very likely that house prices are going to increase over the short term (year) and mortgage rates less.
Despite Covid, Auckland and national house prices have increased 16% over the past year. That $650,000 house last year is now $750,000; next year at 10% it could be $75,000 more. Currently a potential FHB procrastinating is looking at prices rising; those who act sooner or later and have job and income security will likely be looking at lower mortgage rates and short term market fluctuations irrelevant.
Go figure.

... fiat currencies... sheesh.. no wonder they always fail - no fiscal responsibility and far easier than actually producing your way into prosperity and actually having to think and propose solutions that work...

Ultimately governments and banks find it too easy and convenient to blow bubbles and let them pop and cause distortions that increase inequality, penalise savers, promote borrowing and indebtedness

i.e. a modern form of slavery - and of course tghe majority do not get educated in how to use or effectively manage debt - their taught to budget and save (aka... lose...)

If you listen to Dalio he suggests any fiat currency is getting near to collapse when people start speculating with debt (and he's gone through hundreds of years of currencies etc). Scary when you look around the world now wrt what could happen in the coming years.

We will need some realistic debt to income limits on all new lending to stop house prices accelerating away any further. If that is what we DONT want. Existing loans can be refinanced with the same lender at a lower rate when fixed-term rolls over. But if you want to sell/buy refinance with a new lender then you will be D to I tested. We may be able to at least stabilise prices at the current level and figure out a way to finance first home buyers into the market outside the D to I rules with a government underwrite that will control house price inflation.

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I think its pretty clear by now that accelerating prices is exactly what they do want. The people in power just do not give a shit about those who are younger and less wealthy.

Do interest rates need to be lower? I mean, I gettheat there are people losing work but its not because of a lack of bank credit is it? And consumers are spending arent they? This is almost philosophical.

You get a like from me for your comment, and your name.

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These guys really are shameless c*nts.

There.
I said it. Ban me, block me, whatever. I'm past caring.
I'm totally fed up with the Reserve Bank's extend and pretend bullsh!t.

It's asset and moral hazard spruiking par excellence and the only result is generational theft. Consigning young people to a neo-feudal future. Everything this country was founded to never become.

Lol, remember that time you had a brain fart and sold your house to buy metal. Profoundly poor call. Super King Kong mega dumb. Also, calm down.

I'm up 30% in the past 12 months and HPI was 16%.

But, sure whatever Ashley.

Oh, and the bank let you margin lend to do that? No?

When the bank lends you $1M to buy a house and it goes up 16%, your equity increases more than if you had used the $250k deposit to buy gold that went up 30%.

Due Diligence
Correct, but don't confuse cmat.

See my response to you above; coz I consider you a rational actor who is worth engaging with rather than, you know, a complete moron.

Sells the roof over his head in order to buy metal and then has the cheek to call me a moron.

Leverage goes both ways - although it would appear property investors don't like to acknowledge that because house prices never fall in NZ.

IO
House prices can and have fallen. I’ve experienced three falls so I never accept that they can’t.
Yes leverage having a multiplier effect does work both up and down. The key point you overlook is that property is long term and fluctuations are irrelevant.
Bought an investment property 2006; 2009 the RV was 10% below purchase price and equity down considerably more; however sold it in 2016 for a significant gain.

Fluctuations aren't irrelevant - especially after a period of price appreciation like we've seen. Have you seen how leveraged our banks are against NZ and Australian property? Why do you think they shat their pants so much and went with the extreme actions they did? Its because they know that at the levels of leverage they're at, any reasonable fall could cause them to fail.

So you can say that fluctuations are irrelevant if you want to, but it isn't entirely true. They very relevant.

Don't let the trolls get to you cmat. They are here to spruik their industry, and get people wound up.
If they are ignored they might lose interest.

$100 billion amount to roughly $20K per capita, taking into account retirees and children.

All this wealth could be used instead a UBI of $600/week for a whole year, which would end up changing hands and reactivating the economy much more efficiently than using QE for inflating asset prices, but hey sure these guys know what they do!

12
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Property owners & debtors - rejoice! FHB's and savers - get stuffed!

No hemi; it’s probably FHB shouldn’t procrastinate.

Ram the credit spigot straight down our throats.

Productivity?

This thread's out of control and where's Yvil???

Eating popcorn probably...

Te Kooti I noticed that too.

He's finally realised, as a highly successful and wealthy property.investor, that he's wasting his precious days trying to troll and wind up us DGMs!!!!
After all, no successful and wealthy individual would do that, would they? When they could be doing lots of positive things with their time and money.

I think many property investors secretly enjoy creating misery for others - not experiencing happiness themselves. Its about having a sense of control/superiority over other peoples lives.

I make no secret about it.

Come on IO, that's patently not true and I reckon you are more intelligent than that. I have been arguing that house prices will go higher for the last 3 years, often in the minority, being challenged and rebuked for that view. Some of you are the author of your own misfortune.

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Orr - Hi son can I help you pump up that football
Son - No dad its pumped up enough
Orr - Oh come on, it can take a little more pumping, let me do it, pass the pump
Son - No dad, its already totally full up
Orr - Don't be silly, set the pump to max, lets go
Son - Please dad, Noooooooooo
******BANG******
Orr - Oops, who would have foreseen that?

Why are mortgage floating rates at 4.6% when the OCR is .25%?

Many here are real angry as reserve bank is planning to offer more subsidy to speculators so why not vote for green and make them strong (though do not like them as much) .

A (nice) house I bid 990 on, went for 1.325 mil. It's at the crap end of Strathmore, near no shops or parks, has no central heating or double glazing and is blessed with a particularly rubbish school. I think I'm relieved but i also feel ill, despondent, and massively naive.

Bloody hell. I grew up in Wellington - 1.325 million in Strathmore????????????????????
The world really has gone mad.

Just need a good earthquake to shake things up in that market a bit. Personally I have avoided buying in the city due to the quake and rising sea level risk.

Market has gone crazy. 30% to 40% more when already prices were high without 30% or 40% jump.

This is repeat of 2014 or 2015 and no debate on it in political circle or by experts.

Vote for Green.

What's everyone's opinion on why that is the case? No debate I mean. In the last election it was a big topic, I'd argue it's even bigger now. Certainly the No1 internal issue. Is everyone just so excited about legal weed? Why is no mainstream media talking about it?

We were at the point of buying our first home in mid 2019, the market seemed to be stabilizing. Then the ocr cuts started and the price creep started too. I disagree we needed such drastic cutting if any at all, but I see the logic, I think.
What I cannot comprehend at all is the LVR drop. If the OCR cut was to stop businesses going under and mortgages defaulting, why would you cut the LVR and pile heaps and heaps more people into the market. Particularly investors/speculators.

It's all about propping up the bubble, that's why mate.

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Many are expecting or should say are hoping that market corrects once various stimulus ends but now can say with definite that come what may reserve bank and government will not allow for house price to fall and will do as much printing needed or stimulus to support the bubble.

Only option give more power to green as neither National nor Labour will help FHB and only option is Green though may or may not like them. If they reach 8% will be great for all those who favour tax.

Yeah totally agree. TOP have some great policy, but they don't seem to want to get elected. Your right green is the only hope. And I don't have much confidence there. I reckon get in now as it will go up even more if they cut again.

Well the mandate is inflation and employment. Those figures arent actually dreadful yet but maybe its coming.... I dunno, right now it feels like RBNZ have shit the pot.

Supposedly they thought that the covid lockdown was going to cause house prices to drop and people to stop buying houses. But the reverse happened. IMO they need to reverse their changes with the LVR etc.
Otherwise we may likely be heading towards million dollar average house prices in NZ, and 2 million average prices in Auckland and Wellington in just a few years time..

Totally agree that Orrs actions continue to put the banking sector ponzi profits ahead of the interests of fhb'ers and depositors. The Govt has showen and unwillingness to put a stop to it.

We need a reset. Only option is change the tax base. Favor working and reduce debt farming on real estate. See TOP policy. Oting time is here.

I am struggling to see the point of FLP. The property market doesn't need additional stimulus-indeed that would be just throwing petrol on the flames, so presumably the money is intended for SMEs, but the commercial banks will only lend based on their normal criteria, unless they have a 100% guarantee that the RB will pick up any losses. Is that what will happen? Does anyone know how FLP has been used in other countries?

It’s tough to sit back and watch the RBNZ continually support those who have taken excessive risk through debt leverage however punish those who have saved and been more prudent. The other consequence here is the ongoing increase in disparity between rich and poor, through solely supporting asset owners. Orr needs to be shown the exit.

Orr must be dismissed - right now.
He has done enough damage with his reckless and irresponsible policies, which will ultimately structurally damage the entire NZ financial system, and in doing so he is not respecting the part of the RBNZ's which clearly states that the preservation of a sound, stable and efficient financial system is a fundamental duty of the RBNZ.
I have been taking funds away from NZ banks as quickly as I possibly can - as I have the strong feeling that this is not going to end well (I don't know when, but it is going to happen).

Fortunr

Orr wants to send the banks out of business. Central banks are coordinating a take over. They are instructing window guidance to the banks to blow up assets with unlimited credit.

This will create a bust not seen in history. The banks will go and central banks will take over the system. We will all have central bank accounts and digital UBI.

To me, one of the biggest tells about where all this is likely to lead is the trajectory of the Australasian banking stocks over the last 6 months.