90 seconds at 9 am: A new Aussie mortgage war?

US growth tame; US loses trade dispute with Canada; China profits up; Westpac AU launches 3.59% mortgage rate; UST 10yr 2.66%; oil up and gold down; NZ$1 = 73.5 USc; TWI-5 = 74.1

29th Jan 18, 7:56am by David Chaston

Here's our summary of key events over the weekend that affect New Zealand, with news a new mortgage war is about to break out in Australia,

But before we start, note that today is a public holiday in Auckland and the north of the North Island. There will be no video version.

First, the first estimate of American GDP growth for the December quarter was released on Saturday indicating an expansion at the rate of +2.6%. That makes the overall growth for the US economy in all of calendar 2017 up +2.25%. In 2016 it was +1.50%. Most analysts were pleased with the outcome and said it represented a solid if unspectacular performance. Given that the world economy is growing pretty much everywhere at a faster clip, this result is pretty tame.

But the Americans are still enthusiastic buyers of foreign goods. Their December trade deficit rose to -US$71.6 bln as imports rose +8.6% more in December than the same month a year ago while exports rose only +7.8%. For the full calendar 2017, that takes their trade deficit in goods to -US$808.1 bln or -4.2% of GDP. But don't forget they run a trade surplus in services of about +US$250 bln or +1.3% of GDP.

December data for American durable goods orders came in much better than expected, up +2.9% over November and +5.8% for 2017 over 2016. But it was largely due to "transportation equipment" (read, aircraft sales). Otherwise it was bang on market expectations.

Inflation in Canada is running at +1.9% in December. That was right at market expectations but down from +2.1% in November.

And in a rebuke to the arbitrary approach to settling trade disputes, the US's own International Trade Commission has ruled in favour of Canadian Bombardier and against hometown Boeing after the White House slapped punitive duties on the Canadian aircraft manufacturer.

In China, they are reporting sustained growth in industrial probability even as the official campaign to cut overcapacity continues. In fact there was a +21% rise in earnings in 2017 unhurt by restructuring costs and very similar to previous reports. (But stats with long run stability out of China should always be looked at sceptically.)

In Australia, Westpac has launched a 3.59% "two year introductory" floating mortgage rate, its lowest rate in more than 60 years. This signals some impending tough market-share-stealing competition is about to erupt there. One analyst has calculated the four big banks have amassed a AU$600 mln "war chest" available for mortgage rate discounting..

The UST 10yr yield has bounced back to 2.66% (+3 bps). The equivalent 10yr China sovereign bond is off just a little at 3.95% (-1 bp). The equivalent NZ 10yr sovereign bond is also down -1 bp to 2.92%.

Oil prices are up further to be just over US$66 a barrel, while the Brent benchmark is now over US$70.50.

Gold is down -US$12 since Friday and now at US$1,349/oz.

The Kiwi dollar starts the week at 73.5 USc after an uneventful weekend. On the cross rates there is little change either and we are now at 90.7 AUc, and against the euro at 59.2 euro cents. That puts the TWI-5 at 74.1.

Bitcoin is now at US$11,621, +4% higher than where it was at this time on Friday. Keeping prices restrained are worried investors after reports of a massive (NZ$500 mln) theft of bitcoins on one exchange.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

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Source: RBNZ

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84 Comments

by Houseworks | 29th Jan 18, 9:03am 1517169826

Just when you thought interest rates couldn't go lower, they do. From my experience the interest rate wars break out when the mortgage market is expanding with new borrowers and more property market activity. This time is aus.

by Andrewj | 29th Jan 18, 9:32am 1517171548

MiFiD II
https://www.moneymarketing.co.uk/mifidii-transaction-costs-funds/

by Andrewj | 29th Jan 18, 9:37am 1517171873

David, do you how much of our %1.6 inflation is from the non-tradable sector?

by David Chaston | 29th Jan 18, 1:01pm 1517184103

https://www.interest.co.nz/charts/prices/consumer-prices-index2

Tradeables = +0.5%
Non-tradeables = +2.5%

by Yvil | 29th Jan 18, 11:19am 1517177943

WIth the number of house sales dropping in NZ, I wouldn't be surprised if the "mortgage war" also comes to NZ, as banks need to lend in order to make money.

by Yvil | 29th Jan 18, 11:26am 1517178369

I think there is 2 ways to look at interest rates and where they are likely to go:

1) Sooner or later the interest rates will "normalise" to historical levels, i.e. they will rise (the most common held view)
2) The long trerm trend for interest rates is a downtrend and that trend will continue in the absence of a very strong reason for reversal, rates will continue to reduce (the opinion of only a few)

Comments...

by Retired-Poppy | 29th Jan 18, 12:43pm 1517183012

I think is highly likely interest rates will tick up a little then continue in downtrend accompanied with tightening lending criteria by years end. Its highly unlikely to prove a boost to house prices given the high octane lending was driven largely by QE which is largely in reverse. I imagine a lot of speculators (flippers) finances and emotions are not geared to deal with an environment void of capital gains - selling will continue.

It's the rising tide of non performing loans that can prove the end game for banks and there is no clear indication of that - yet. It concerns me that in recent years banks have 85% of lending secured by property and there's more interest only mortgages (this is not a dig at you Yvil)

I cannot help but wonder if they might as well have lent it out to all and sundry to speculate on shares. At least most shares are liquid! We are one financial shock of being forced into completely unknown territory where we are confronted with central banks with few tricks and blunt tools. This is when we all look at each other and reflect on our spending habits of the previous decade....

by Yvil | 29th Jan 18, 3:02pm 1517191354

R-P, not having a dig at you either ( I appreciate your comment) but there are a few things I disagree with:
1) I don't believe there will be "tightening lending criteria by years end", the last move by the RBNZ was a slight loosening of the LVR and I cannot see a reason why it would tighten as you claim.
2) QE is not "largely in reverse", it's being eased = still printing money and possibly stopped in some countries, but it's not reversed = bought back
3) "At least most shares are liquid!" I see this as a bad thing in a downturn as liquidity exarcerbarates the fall of value of the asset. Also in hard times, would you rather sell your shares or your the house you live in? These are 2 reasons why the sharemarket has historically crashed more severely that real estate.

by Retired-Poppy | 29th Jan 18, 4:16pm 1517195772

Yvil, Fed QE reversal has begun here;

https://www.investors.com/news/economy/federal-reserve-reverses-qe-asse…

ECB scaling back here;

https://www.theguardian.com/business/2017/oct/26/ecb-to-halve-bond-buyi…

Japan not going there yet;

https://www.japantimes.co.jp/opinion/2017/09/28/editorials/great-unwind…

Agree with you on number three. The concern I have about any future downturn (employment shock etc) is the lack of interest rate stimulus buffer combined with much higher debt levels. To me, this only serves to heighten the chances considerably that real estate will continue to fall, on very low volume and for an unusually long period. In the past, lower interest rates and large capital inflows have quickly revived bank lending and fostered faster recoveries. I suggest that NZ can't rely on a replay post GFC type recovery. Essentially, we are about to trip over the can we repeatedly kicked down the road.

I see a real potential for banks to tighten lending on real estate as conditions deteriorate and problem loans mount. Note the banks aversion towards dairy. They will seek to preserve capital. While the RBNZ has relaxed the LVR, I see this making very little difference as the mood towards lending to speculators (including interest only lending) has changed firstly in Australia and is sure to flow on here (if it hasn't already). FHB are no longer suffering the anxieties of missing out - it's now a buyers market initially in our biggest city, Christchurch and will spread nationwide in the months ahead. I think a prolonged period of Mum and Dad speculator - Landlords exiting the game has yet to play out to is fullest - it's only getting started.

by Hardly | 29th Jan 18, 12:31pm 1517182274

Long term trend seems downwards but it would be folly to assume 4%-5% is the new average.

The stimulus is unwinding. The theory of perpetually lower interest rates relies on the assumption that the economy will crash preventing this unwinding from continuing.

This is an extraordinary prediction. That the economy can’t grow in an environment with ‘normal’ interest rates and without QE.

If this prediction is false, interest rates will rise and many debtors will be in big trouble.

by Yvil | 29th Jan 18, 3:13pm 1517192003

Very interesting post Hardly.

In my personal opinion, the economy would indeed crash if interest rates were to rise by 2% or more. This wouldn't be good for anyone, no government or Reserve Bank wants their economy to crash. Therefore I believe that interest rates will not move up significantly.
I also believe that governments and Reserve Banks want growth above all and by any means. I do foresee some economic trouble ahead (of what exact kind, I don't know) but I believe interest rates will be dropped to lower levels than now in order to avert/minimise the yet-to-come trouble.

I'm genuinely open and interested in counterpoints to my opinons above

by Hardly | 29th Jan 18, 3:45pm 1517193912

Consider this Yvil, if interest rates were raised by 2% and if the economy/global economy did crash, and if interest rates remained at that level, would the world economy remain in recession forever? No, I don’t think so.

So perhaps it is the nature of the adjustment. People seem to be focused on increased interest rates = lower growth, therefore interest rates cannot rise. However, what if growth leads interest rates? Then interest rates can rise.

But regardless, interest rates don’t need to rise 2% to be a meaningful rise. Floating is already in the high 5s so a 1.5% rise would be significant. And presumably the fixed rates are based on cheap money from Europe or somewhere. Easy to see those rates going up.

So we probably agree.

by Hardly | 29th Jan 18, 4:00pm 1517194826

Also, remember for all the predictions nobody knows the answer. So what should you do? Invest conservatively, diversify, drip feed your money into the market, avoid debt. If you do these things you won’t make as much money but you also won’t lose as much either. I worry about the New Zealand specuvestors (and bitcoin billionaires) because they are all in and often dependent on a certain market outcome in the short term. If 8% interest rates will see you bankrupt then it’s time for a change.

by Yvil | 29th Jan 18, 6:52pm 1517205140

Hi Hardly
It's nice having a conversation, even with differing opinions, without mud sliging, much appreciated. Thanks for your reply, I certainly don't disagree with the essence of it. You may have more faith in our governments making the "tough calls" and doing the "right thing" even though it will hurt us in the short term, than I do.
Yvil

by BadRobot | 29th Jan 18, 7:47pm 1517208450

Personally I think the only way out of the of the catch 22 we are in is forced de-leveraging - restrictions on new debt so individuals, company's and country's can reduce the amount of debt outstanding even if as a percentage of income things improve. Otherwise I think we will always be one step away from financial armageddon. Do I think this will happen - no - I'm not convinced that NZers are willing to go through the pain that would be involved.

by RickStrauss | 30th Jan 18, 12:16pm 1517267803

The question is, is it really possible to avoid the underlying cycle that has been the reality of capitalism? Has QE avoided it?

Most of the sources (for example) our esteemed colleague-in-commentary Stephen Hulme posts suggest that QE has not been successful at what it was intended to do...

Does that mean it's only delayed the cycle?

by Independent_Observer | 30th Jan 18, 12:23pm 1517268239

Rick - found Ray Dalio's thoughts interesting (beautiful goldilocks period):

https://www.cnbc.com/video/2018/01/23/ray-dalio-us-markets-in-beautiful…

by RickStrauss | 30th Jan 18, 12:33pm 1517268821

Thanks, will have a watch of this.

by Independent_Observer | 30th Jan 18, 12:57pm 1517270260

I'd be interested in what your thoughts are - I've been doing a bit of research on US markets as my share holdings there appear to be appreciating a bit fast for my liking. Anyone else concerned about a bubble forming there?

by meh | 30th Jan 18, 3:56pm 1517281017

...forming there? Or already formed and only waiting for maximum inflation/pin?

by meh | 30th Jan 18, 4:45pm 1517283954

by dictator | 30th Jan 18, 12:32pm 1517268731

QE doesn't avoid anything. It's just to get the economy(-ies) through a tough time. The cycle or crash is just inflated to an even larger extent. Look at Greenspan's money printing in the run up to .com bubble. Companies were doing crazy things and weren't operating like businesses. My concern is how many broken company models are out there in the market. I'm sure the S&P500 is riddled with these broken indebted companies, there are many in South Africa, probably here and Australia, etc.

Much like the run up to the GFC people were concerned that something would go wrong, but next to no one had any idea what would fail and cause the crash. It's the same right now.

by CJ099 | 29th Jan 18, 11:24am 1517178281

"In Australia, Westpac has launched a 3.59% "two year introductory" floating mortgage rate, its lowest rate in more than 60 years. This signals some impending tough market-share-stealing competition is about to erupt there".

Well lets face it the NZ and Australian mortgage rates have been too high for quite some time in comparison to the rest of the Western World. Local buyers are going to need some help to afford those over inflated house prices driven up by foreign buyers and speculators in the last ten years.

Otherwise the only other option is to let property prices fall to more affordable levels.
I always found it funny when other countries talk about 'Stress Testing' their mortgage rates and them worrying about but what if they were the 4% to 6% mark!?

Here's an example article from Better Dwelling: Canadians Are Going To See A Huge Reduction of Borrowing Power… On Top of Stress Tests
https://betterdwelling.com/canadians-are-going-to-see-a-huge-reduction-…

by Rumpole | 29th Jan 18, 1:20pm 1517185206

Excellent link to be read by those interested enough and intelligent enough so unlikely to be understood by Bankers and politicians or at least not acknowledged.

by Yvil | 29th Jan 18, 3:35pm 1517193309

Yes, interesting article. It states that with the expectation of increased interest rates in the future, there will be less borrowing power and therefore less buying of real estate. Can't argue with that.
What it does not adress is what happens with all the existing mortgages, which represent the bulk of all lending, as they come up for renewal at a 32% higher interest rate (their figure). I put forward that some mortgage holders will go bust and that the ones who don't, will have much less disposable income for everything else than mortgage repayments. This will lead the economy to tank which is very ironic because the presumed reason for rising interest rates in the first place was... an improving economy

by Roelof | 29th Jan 18, 4:35pm 1517196911

I suggest that there is capacity for most householders to absorb higher interest rates without suffering too much. ( In NZ )
At the moment , households spend 8% of income of debt servicing.
This chart shows the historical context.
Of course.. there will be some , who are over leveraged, who might suffer badly
https://www.rbnz.govt.nz/statistics/key-graphs/key-graph-household-debt

My view is that, Central Bank, financial repression is here to stay... The Global economy would fall into recession if rates rose too much ...
Inflation fears is about the only thing that would pressure Central Banks to raise rates dramatically..

Central Banks are between a rock and a hard place... I mean between a Bubble and a hard place..
they'd love to normalize rates...but the Global debt burden is too high and growth is too low.
just my view...

by Yvil | 29th Jan 18, 7:06pm 1517206003

Hi Roelof, thanks a lot for the RBNZ graph, I'm astounded that debt servicing represents only just over 8% of disposable income. If true that would throw my opinion above out-the-window.
Still, I note your last paragraph: "Central Banks would love to normalize rates...but the Global debt burden is too high" well if debt servicing is indeed only 8% of disposable income, why is the "debt burden too high"? for banks to "normalise interest rates"?
Your view?

by Roelof | 29th Jan 18, 9:33pm 1517214836

Yvil... The GFC centred in USA and especially Europe. As Ray Dalio put it, it was the culmination of a long term debt cycle.
NZ never had a debt crisis , but we were the beneficiaries of global ultra low interest rates.
That 8% is for NZ households...Most of NZ private debt is in the household sector.
NZ govt debt has grown alot and I'm guessing it will continue to grow.

In USA most private sector debt is corporate. ( post GFC , it has grown rapidly )
https://fred.stlouisfed.org/series/TDSAMRIAONCUS

There are still big problems in europe, ...USA has deleveraged a little bit, but the corporate sector has taken on debt..
USA is still running massive Govt deficits...
There has been very little global deleveraging, in fact in aggregate , debt has increased, but because of ultra low interest rates, the debt burden has decreased a little.. ( think, -ve interest rates in europe) ... Its' called "financial repression".... Savers have been sacrificed.
We are still in the , so called , new normal of low Global GDP growth..... Debt Capitalism requires credit growth to survive..

I subscribe to Ray Dalios' view that "average" statistics might no longer be that useful. His view is that the wealth inequality gap is now so large that we have to separate data into 2 groups in order to truly understand what might be going on.. ie... Bottom 60% and top 40%.
I suppose that might apply to the use of aggregate data as well
https://www.linkedin.com/pulse/our-biggest-economic-social-political-is…

by Roger Witherspoon | 30th Jan 18, 8:08am 1517252897

One factor that gets overlooked is how dangerous low rates are. If you have a 2% mortgage and it goes up to 2.25% that is a a 12.5% rise. If you have a 5% mortgage rise and it goes up to 5.25% it is a 5% rise. If you have a 1.25% mortgage and it goes up to 1.50% that is a 20% rise in the biggest household expense.

This is a big plus for New Zealand as against the major economies.

by MortgageBelt | 30th Jan 18, 8:12am 1517253133

NZ does not enjoy low mortgage rates, contrary to Media misinformation.

by Roger Witherspoon | 30th Jan 18, 8:20am 1517253633

Exactly. That is a good thing. I checked out mortgage rates in the UK when I was over there, if the banks really like you it was possible to borrow at 1.2% but most people seem to pay in the 3-4% range. Quite different from here, and houses seemed about half the price there relative to their income. Residential yields were 5-7%.

by Andrewj | 29th Jan 18, 7:08pm 1517206106

Whats the debt burden of renters

by Roger Witherspoon | 30th Jan 18, 8:14am 1517253255

My guess is actually it's pretty low with respect to income, precisely because the interest rates they get charged are so very high. The maths is different, so looking at the loans on Harmoney has been a real eye opener for me. Typically people get charged 15% to 30% if there credit record is patchy, but the amounts are $5000 to $10000 so the repayments are easily covered by income. In many ways they are in a much safer position.

by Andrewj | 30th Jan 18, 8:25am 1517253941

I was thinking of all the indebted landlords trying to cover costs with the rent. My friend with all his houses has put rents up by$30 p w and it's the third such rise in the last 18 months. So those renters are having to fork out an extra $4.5 k and I don't think they have had any wage increases. Fortunately my mate sings the praises of the accomodation supplement, it's like a guarantee from the government he's going to get paid and no empty houses anymore, it's always 52 weeks income.
My lawyer dropped in last week and told me that he is witnessing real poverty in the rural towns as low income earners get forced out of the bigger towns into substandard accomodation, often with meth addiction. He said it's happened in the last 10 years and forced him to rethink his views on the way the market works.
Friends son has a great job in AKL, but only on 75k a year, after tax and rental there is bugger all left so his wife works but they want to have children, he will be forced to look offshore where his skills are better rewarded.

by PocketAces | 30th Jan 18, 8:38am 1517254716

I wish the govt, any govt would change the accommodation supplement and have it that landlords are the ones having to go cap in hand to WINZ for the supplement that is intended for them. Could even change the name of it and seeing as they know full well who and what it is for, maybe it could be called the landlord supplement.

by Kakapo | 30th Jan 18, 8:45am 1517255128

The Your-Bad-Investment-Is-Not-The-Tenant's-Problem Landlord Benefit.

by Pragmatist | 30th Jan 18, 8:56am 1517255769

Turn it around.. The landlord Loan scheme, balance accrues and accumulates interest at say 3%, and the govt gets first bite of the pie when the house is sold. Compulsory repayments at 10% of landlords net rental income if positively geared. if the balance gets to high the govt calls in the loan and adds one of the landlords houses to housing nz stock. :)

by rastus1 | 1st Feb 18, 1:46pm 1517445983

The Nat Govt had 9 boom years to remove the asup in an environment in which would have had minimal downside. It would be a brave govt to take it off now - they would get the blame for any property crash that followed. Yet it still irks me that joe public is topping up the income of that group of beneficiaries called landlords. Hypocrites.

by murray86 | 30th Jan 18, 9:02am 1517256170

This comment proves a point I and others have made about the Government subsidising the housing crisis. This person has made poor business/investment decisions and is able to get the tax payer to cover his risk. it really does support the need for rent controls, to stop him fleecing the renters and the tax payer while he gets rich.

by Andrewj | 30th Jan 18, 9:11am 1517256708

Taxpayer subsidised landlords. Great idea, like that could never go wrong. We just don't have courage to fix the problem. Rents are going up due to a housing shortage the market at work, nothing to do with inflation. Although councils and insurance companies are doing their best.

by Alter Ego | 30th Jan 18, 8:37pm 1517297858

When MP's voted themselves a cash cow....how dumb were taxpayers to ever, ever vote for them...ever again.

We need a change of stance, a change of beneficiary, not multiply the bar-stewards ripping orf the poor long forgotten Taxpayers. and the poor to boot. ..Plus GST.

Change the Tax Take to 20 Grand ...Tax Free.....for all real Workers. Tax Capital Gainers.

Boot the other beggars out.....Workers have rights too...a house should be a home, not a theft by right,left,
b-leaders.

I am fed up of feeding these so called leading lights, double dipping with ease and grand theft Auto and Pumping up their and others rentalmental Housing perks....by dint of daft legislation.

There should be one rule and one rule only, "never ever screw yer customers"......especially the poor ones.

Who ever they may be and whatever their financial situation, in favour of another...ease orf.

Nuff said......Labour was given a chance for change....

Please comply ...this rentalmentaldipstickingwasanationalpasttimelongpastitstime...Cannot you read joined up writing...yet.

Or was yer Christmas and New Year Holidays too much to cope with......cos that can be changed too.

Some poor suckers only get a couple of weeks....and the blood suckers get the perks.

Lead by example, not by rorts....ya cannot have yer cake and eat it..

Double down, not up...yer useless bunch of thieving un-economical fiddlers.

Remember the revolution....I shall start my knitting and want a front seat.

Remember.....Heads I win, tales....you lose....cos it ain't Working....MP's...but then it never was.

Happy New Year.....Happy New Voters.

I wonder if they have built electric tumbrils...yet.

Tumbril - definition of tumbril by The Free Dictionary
https://www.thefreedictionary.com/tumbril

Define tumbril. tumbril synonyms, tumbril pronunciation, tumbril translation, English dictionary definition of tumbril. or tum·bril n. 1. A two-wheeled cart, especially a farmer's cart that can be tilted to dump a load. 2. A crude cart used to carry condemned prisoners to...guess where.

by Pragmatist | 30th Jan 18, 8:50am 1517255435

Harmoney is an interesting place to be for sure. However I no longer trust any of the data other than age, and income data and credit rating. The rest is noise, yesterday I saw one loan application for $20k for home improvements and the applicants residential status was liosted as boarding. Suffice to say I steered clear of that one.

Right now there is one for somebody trying to top-up their existing ~$10k loan to $33k at 22% for 5 years for debt consolidation. And s/he has a higher monthly income than me, and lives in a small town so rent and other cost of living should be cheaper than here in Auckland.

by Conrad | 31st Jan 18, 10:36am 1517348180

Are you implying that someone would make a misstatement on an online loan application? I'm shocked, shocked I tell you.

by Andrewj | 29th Jan 18, 2:46pm 1517190363

http://theprovince.com/news/bc-politics/mike-smyth-shocking-massive-los…

by Didge | 30th Jan 18, 8:39am 1517254785

Shades of the National party's last nine years.

by Ex Expat | 30th Jan 18, 11:19am 1517264396

You are the political 'Ying' to my 'Yang'. I wake up each morning and put another strike on the calendar, counting down the days until the coalition of the clueless is dispatched and we again have a Prime Minister I can respect.

by Independent_Observer | 30th Jan 18, 11:24am 1517264656

You wouldn't happen to be a white, male, property owning baby boomer would you by chance?

by gingerninja | 30th Jan 18, 11:38am 1517265523

Hahahah. White, male, property owning baby boomer easily identified using following check list;
- property spruiking comments in all comments sections
- perpetually angry since Oct 2017
- uses word "communist", "doomer", "loonie leftie"
- massive mancrush on John Key

by Retired-Poppy | 30th Jan 18, 11:53am 1517266430

IO, gingerninja - nice one! hahahaha ;-)

by gingerninja | 30th Jan 18, 11:57am 1517266678

It's not entirely true though, there's plenty of white male boomers who despair of the increasing social problems in NZ, and who voted labour. My father-in-law is one of them.

by RickStrauss | 30th Jan 18, 12:09pm 1517267378

I don't know who my father voted for, only that he went against National this time. It was as a protest vote against how they've been mismanaging things and the effect this is going to have on his grandchildren. His vote was about holding them to account after three terms. (Also, their growing list of ethical failures was a factor.)

While he himself has of course been enriched by the process, he does believe government should not just be about short termism.

by Ex Expat | 30th Jan 18, 12:13pm 1517267596

White, male, boomer (just) own a home with no mortgage (no other property), aside from a speeding ticket in 1987 I've never been in trouble with the law, never taken a government benefit of any type, long term stable married hetero normative relationship. Providing for for my own retirement, sober, don't smoke, keep fit. Take public transport. No doubt that's as boring as heck to most of you, but it works for me and my nearest and dearest.

by Double-GZ | 30th Jan 18, 12:24pm 1517268241

...who also happens to live in postcode 1071.

by Ex Expat | 30th Jan 18, 12:38pm 1517269134

Yes, a postcode full of other stale and mostly pale people.

by Independent_Observer | 30th Jan 18, 12:18pm 1517267883

So why is it so hard to respect Jacinda Adern? Surely nothing to do with being female and younger than you?

by Ex Expat | 30th Jan 18, 12:27pm 1517268439

What has she done to earn my respect? She's only in the position of Prime Minister by accident. No notable achievements in life prior to that. Lost two elections to Nikki Kaye, then jumped across to a safe seat.

by Independent_Observer | 30th Jan 18, 12:50pm 1517269807

Has she had the opportunity? Are you willing to give her 3 years and then make an assessment, or because she wears a red uniform shes part of the enemy and will never have your respect? (sounds like the civil war...)(but I'm sure you're an open minded individual who is willing to give people a chance....)

by Ex Expat | 30th Jan 18, 12:59pm 1517270358

If the PM turns out to be a doer that will make my children's future better then she may well earn my respect, but she will never have my vote as I'm a National Party member. As I wrote above, I'm the Ying to the lefty posters' Yang here.

by Independent_Observer | 30th Jan 18, 2:51pm 1517277100

Just so I understand your cognitive dissonace clearly - you respect and support the man that made your childrens future worse (John Key), but have no respect nor will vote for a women who was elected upon policies designed to make young peoples futures better (Adern)?

by Ex Expat | 30th Jan 18, 3:24pm 1517279057

Why is my children's future better under Labour? They are growing into well adjusted people who will be well educated and top earners. The world is their proverbial 'oyster'. What could Labour offer them that would make them stay? I want them to go abroad and find their niche. Living in a country where they would be treated as a cash cow makes no sense to me.

by Independent_Observer | 30th Jan 18, 5:30pm 1517286627

Haven't National turned many kiwis (renters) into cash cows for landlords via their policies? So if we don't want our children turned ino cash cows, we're better to vote National? Umm I don't think so. But it's fine for renters to be used as cash cows (rent) but its not ok for workers to be used as cash cows (income tax) to cover the expense caused by landlords in the form of welfare and accommodation supplements? Makes sense...NOT!!

I know - we could fix the cause of the problem and not continue to operate at such superficial level....(our house prices need to come down significantly through policies that National never wanted to touch!!!)

by Ex Expat | 30th Jan 18, 5:43pm 1517287436

So how will Labour make this better for my children?

BTW: I have no faith in either party to provide cheaper housing for my children so I'm ensuring that they will all be able to afford a mortgage free home when my wife and I cark it. It's a real impost on the quality of our sunset years, but it's a sacrifice we're willing to make.

by notaneconomist | 30th Jan 18, 3:53pm 1517280818

Independent Observer - You ask the question re Jacinda "Has she had the opportunity? Yes she has!

She is 37 Years old and has done what exactly? She has never started a business from the ground up, she's never been in the corporate world. She has spent the most productive years of her life picking up pay cheques from tax payers. For the last 17 years or so this woman has had plenty of time to prove herself.

NZ has some remarkable women who have made some amazing achievements. Their actions have been louder than their words. If Jacinda Ardern had acomplished something like what Theresa Gattung has been able to do then we would all know that she was up to the task.

A capitalist gets out makes their own way in the world.
A Socialist wants what a capitalist has and does everything they can to transfer from the capitalist to themselves.
Jacinda has never been a capitalist she has only ever used what the capitalist has achieved for herself.

by Independent_Observer | 30th Jan 18, 4:11pm 1517281902

And how long has Bill English been a politician?

by Independent_Observer | 30th Jan 18, 4:14pm 1517282061

And based on your opinion lets cease all socialist policies in this country and lets see how the capitalists survive...from now on zero welfare payments/accommodation supplements. Then lets see where the truth is....(watch the capitalists cry...'everyone's stopped paying rent and my property portfolio is crashing..)

by notaneconomist | 30th Jan 18, 4:59pm 1517284768

A mistake made by all socialists is the one where they think the whole world will explode if socialism was reigned in.

Capitalists don't survive because of socialism they survive despite them.

Socialism hasn't solved one social problem ever! But it sure as heck ensures that the number of social problems keeps on increasing.

Socialism is designed to make people dependent upon it. Yet humans by nature are meant to be independent.

No country has survived on Socialism alone ever. China the Nordics etc all rely on a free market economy surely that tells you something?! Socialism is the devil!

by RickStrauss | 30th Jan 18, 5:06pm 1517285183

Socialism is the devil!

Mate, take a chill pill.

If you're conflating social democracy with communism you're wildly off course. Communism is as unreal and impractical as are Ayn Rand's worlds.

by RickStrauss | 30th Jan 18, 12:23pm 1517268187

never taken a government benefit of any type

Taking subsidised public transport, eh? ;-)

But more seriously, surely you received these:

1. Free dental and medical care as a child
2. Free primary and secondary education
3. Heavily subsidised tertiary education (a degree for $12,000, from your earlier statement - a veritable bargain!)
4. Subsidised medical care (also the reason our private insurance on top is cheap)

All of these are benefits provided by NZ's taxpayers. As will your Pension be, if you make the philosophical compromise and claim it.

by Ex Expat | 30th Jan 18, 12:36pm 1517268963

I saw my rates bill and thought stuff it, if I'm paying for it I'll use it. More money for my retirement as well.

If I recall correctly, schooling was compulsory as were visits to the Murder house. Yes, I completed a degree and paid what was due, I never claimed any allowances.

Medical for the family comes down to maternal care (not for me). I get regular medical tests free, but pay $90 for the doctor visit itself. Where a subsequent test is required it comes out of my pocket. Household tax bill easily pays for this an a number of superannuitants.

As for the pension. I'll accept every last $ legally available to me when the time comes so I can leave the largest possible bequest to my children. I'm a multi generational planner.

by RickStrauss | 30th Jan 18, 2:53pm 1517277227

Well, yeah, that's that key thing really. We're all generally past, present and future beneficiaries in this New Zealand social democracy, benefiting not only from our own earnings but from the pooled resources of wider society.

Whether it's a heavily-subsidised tertiary degree, or affordable healthcare and prescription medicine a fraction of the cost people pay in the USA, subsidised public transport or free schooling - or heck, even affordable housing due in part to the increase in supply fostered through various government initiatives over the last century.

by Ex Expat | 30th Jan 18, 3:16pm 1517278599

Agree, BUT the key point that interests me is the balance i.e. how much is legally taken out of my pocket from work I've done and re-distributed to others who had made no such effort. To me the Left is ideologically biased to taking more from me than the Right and I pay more than enough already. I've already told my children that I expect them to become expats at some stage, just go somewhere nice to visit. Heck if becomes economically better to join them I will.

by RickStrauss | 30th Jan 18, 4:52pm 1517284377

Agree, it's a balance thing. It's about what services we want and expect to be part of our social democracy, whilst also searching for ways to make these more efficient and less bloated.

The contra to that point re Left being ideologically biased is the Right being ideologically biased to view all taxation as theft, and to regard oneself as having lived completely in independence of any benefits provided through the contributions of the wider population of society, having achieved everything purely on one's own.

It unfortunately seems to result in a race to the bottom, with tax cuts being seen as something divine and good always the best thing to aspire to, and services declining as a result. E.g. the English NHS, where the tack seems to be to underfund the service then point to its failings as reason to cut funding to it. Or our last decade where services declined - even to the point of the Police minister calling out her own PM in public to get additional funding for Police.

Question seems to me - how to tackle both bureaucratic bloat AND the maintenance of services we expect in our society.

by Ex Expat | 30th Jan 18, 5:21pm 1517286093

I don't see a Labour Government tackling the bloat given it's dependent on those very workers for its voter support.

by gingerninja | 30th Jan 18, 12:28pm 1517268517

I don't think the issue is about what boomers *have*, the issue is that boomers gloat about what they *have*, refuse to acknowledge the circumstances that they benefited from (somewhat uniquely), refuse to acknowledge that generations following them will perhaps never be able to achieve the financially security that boomers have, and not because they haven't worked as hard, but more that circumstances have not been as favourable, in fact, they have been unfavourable, that boomers often resent contributing to steps to improve the social problems facing younger generations, that they refuse to acknowledge the danger of the growing wealth inequality etc. Refusing to acknowledge ones own privilege and luck, whilst at the same time gloating and trolling those who have less unfairly seems to be the crux of the issue.

by RickStrauss | 30th Jan 18, 4:56pm 1517284578

Was talking to a guy today who made multiple millions through property and now lives semi-retired in a beachfront mansion.

"It's all the luck of timing," he said. "We were very lucky to get a lot of land cheap then see it soar in value. Kids these days have it much harder."

There are certainly some out there who do know how lucky they are. He also noted that kids these days have far less support from governments in terms of increasing housing supply, saying that the last couple of decades of governments have completely ignored the issue.

by Ex Expat | 30th Jan 18, 5:16pm 1517285764

You make it sound so simple as if every Boomer bought a cheap property and is now wealthy. The outcome with my Boomer siblings suggests it wasn't that easy; one chose to travel instead of settle and is as mortgaged as any millennial, another hasn't applied themselves and faces a bleak future with no home. Same parents, same opportunities, different decisions and outcomes.

by gingerninja | 30th Jan 18, 5:42pm 1517287367

The statistics tell the story, we don't require anecdotes. Home ownership is at a lower rate now than it was for boomers. Housing is less affordable for younger people now, than it was for boomers. It's not a debate, the data is there. And it's not about how hard different generations have worked, various studies have shown that millennials work just as hard, and actually save more than boomers did. The issue is that *some* boomers refuse to acknowledge their luck and privilege, worse still, actually troll those less lucky than them and gloat about their wealth and housing advantages....some even vote to maintain the status quo, to deny the younger generations the same opportunities that they themselves benefited from, and get butt hurt at the very notion of a more equal society.

by Ex Expat | 30th Jan 18, 6:03pm 1517288601

The solution is there. Ignore the Boomers and build new houses. Isn't that effectively what this Government is going to do?

If that's not the solution, then maybe the millennials just want the Boomer properties but at a cheaper price. That's a very different discussion.

by Independent_Observer | 30th Jan 18, 6:09pm 1517288968

Both generations are expected to buy from the same market - problem is is that we have boomers/foreigners buying the houses that the younger generation should be buying and living in, but instead they're being turned into rentals...

So perhaps we could flip your argument on its head - maybe the boomers just want the millennials houses but they're paying far too much for them (and pricing them out of the market..). That's a very different discussion..

by Ex Expat | 30th Jan 18, 6:47pm 1517291222

Evidently, despite elevated prices, existing houses are cheaper than building new equivalents, otherwise there wouldn't be an issue. We're either paying our building suppliers, builders and peripheral suppliers too much, or we're demanding houses that are too expense to build in the preferred locations. You can try to suppress the boomer/foreigner buyers to allow less well off buyers to purchase existing houses, which the Government is trying to do, but the evidence isn't there (yet) that it's working and I wonder if it will. I've given up waiting and put funds on longer term deposit.

by PocketAces | 30th Jan 18, 6:55pm 1517291744

I doubt he cares very much about it, and is pretty happy that he is okay. We are going to have to look back to see how we go forward and I think we've gotten to the stage we need to look as far back as Michael Joseph Savage and take a few leaves out of his book.

by Andrewj | 29th Jan 18, 2:48pm 1517190489

Home loan from Bank of America
https://www.bankofamerica.com/mortgage/home-mortgage/

by Didge | 29th Jan 18, 11:34am 1517178887

The other alternative is that our banks have placed themselves in a situation that cannot be contained. It must end in a fiasco, but exactly how is anyone's guess..

by Boatman | 30th Jan 18, 6:25pm 1517289917

The accommodation supplement shows how the best of intentions ends up with the worst possible unintended consequences.

Like the extra $50 a week for students ................ what has happened is that rents for students have gone up at $50 per week