New Classic rate of 4.35% lays down a very competitive marker ahead of an expected OCR rate cut

Zero chance of that I'd say Sharetrader. That would imply panic and they're certainly not that - in fact they ticked off Westpac with its forecast of a 2% low only a few weeks ago claiming that would be forecasting recession type interest rate levels. They want the currency down because they need inflation higher, but they're certainly not desperate - we'll get at least another couple of cuts, but if won't come all at once.

I agree with Grant A, such an action would clearly indicate huge panic at the RB and that would signal others should panic and that would be self-reinforcing. Also I see no immediate NZ event? that forces that or such an external event? that covers the RB's butt and makes it imperative to act.. I think 25basis points is highly probable though, but we'll see.

The debt might be cheap but the risk of severe impact is also at its greatest for decades.

Then of course when this blows being 100% in debt or 200% makes no odds really, sadly of course your foolishness will be paid for by the likes of me. Personally Im almost inclined to think debtors prisons should be brought back.

After decades of habituation to a one way play, paying down debt does sound a bit contrarian and probably has not been the perfect strategy while interest rates are falling.
What about when they are at the lowest rates (by some accounts) in 5,000 years - well forever you might as well say.
Might pay to just watch out that greed doesn't get the better of you Simon.

When do you propose paying down your debt? How do you think your debt is ever going to go down?

Where is all that money to cover the cost of that debt going to come from?
Especially when the revenue starts to shrink, or commoditise?

Your statements resemble those of employees who get paid too high of a salary; they can't not conceive of money shortflow, job loss, or other cutbacks. To them there must always be something hidden behind the next door "there just must be"...or peoples' failure is purely because they're not keeping up their game. All those cheap secondhand BMWs for sale in last few crashes, some folks just don't learn.

Where is the cashflow coming from to service this extra debt you're talking about?
Why has the person not already committed extra "loan-ability/worthiness" (must find the technical term for that one day) - if they are doing the job properly then their credit limit / dance card will already be at their service level......therefore increasing that level of debt just because rates are low? the's government/council thinking. Increasing _because_ rates are low now, just means when they lift, and they will, the commitment becomes highly risky and difficult.

Probably with investing when rates are good in NZ, is that rates are good because the opportunities are low for almost everyone.

And for me .... RBNZ showed me. I had good income one year in dairy...so what did RBNZ do? they penalised me strongly by lifting RBNZ - despite mountains of evidence of every side indicating the imminent drop in economic activity in next couple of years. No point holding on for a good year, the RBNZ or government just move the cheese and pocket the cash themselves.

Risk comes from not knowing what you're doing. sure. then you'll understand that the interest rate charged on your student loan is higher than inflation rate - taking longer will cost more; as well as reducing your ability to borrow/leverage to your full service capacity (student loans are not revenue generating, so count as bad debt - especially now that universities have brought in Time Limits for completion. Students now only have a set number of years to complete their degree or diploma, and the cross crediting of passed papers and degrees is downgraded by when they were done....so the loan sticks around well after the benefits are passed = bad debt)

So when are you going to reduce you debt?
When your income shrinks?? Yeah right, when your income shrinks is _too_late_ because you won't have the spare income to delever.
It's important to proactively manage the debt level, delever old earners with surplus while you can, get rid of bad debt ASAP, try to ring fence leverage & risk on new projects to the project itself .

Otherwise you are going to require infinite inflation ability, and the ability of human labour to produce that effect is impossible - thus crashing the system.

Simon. An investor owns capital and assets in an arrangement that obtains a benefit. You borrow and lend or buy to achieve a margin. You are a trader.
You might make a good margin and be successful but you are not an investor.

Not just 'expanding asset base', but putting the capital to work in a way that produces income well above the cost of that capital (and above conservative (so high) estimates of future costs of that capital in such cases as this where the rate is only fixed for 1 year)

Sure, but if these interest rates are a reflection of an environment where the opportunity to drive income is missing, then you have a double-edged sword. My time back in Japan made me acutely aware of that.

Sure, but if these interest rates are a reflection of an environment where the opportunity to drive income is missing, then you have a double-edged sword. My time back in Japan made me acutely aware of that.

That's what i was implying.. borrowing cheap Yen to buy higher yielding currencies.. not a lot different to what I'm doing. If there were apartments in toyko yielding net of expenses 6% plus do you think they would be chasing high yielding currencies or would have first poured Yen into real estate until prices were such that yields matched cost of capital, then forcing Yen overseas in search of a margin