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New Zealand's largest home loan lender follows ASB with its own rate hike along with Westpac and BNZ, so the window for grabbing cycle-low fixed mortgage rates is closing fast

New Zealand's largest home loan lender follows ASB with its own rate hike along with Westpac and BNZ, so the window for grabbing cycle-low fixed mortgage rates is closing fast

Following a very direct and clear signal that the RBNZ has turned hawkish and is preparing to hike the OCR sometime later this year, banks have announced fixed home loan rate increases.

First to move, and before the RBNZ signal, was ASB.

The RBNZ is encouraging the move. Its meeting notes states "The Committee agreed that any future increases in mortgage rates will further dampen house price growth."

Soaring inflation figures released on Friday have made an August RBNZ rate hike seemingly inevitable.

These latest mortgage moves follow market reactions that drove the wholesale interest rates sharply higher, and the NZD temporarily higher as well.

Daily swap rates

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Source: NZFMA
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First, Westpac signaled its rate rise last night, then BNZ raised rates and now ANZ has joined in with its own hikes of fixed home loan rates.

ANZ however has not raised their rates quite as much as ASB or BNZ, leaving their rate card under these key rivals.

The ANZ one year rate is up +31 bps to 2.50%. Their eighteen month rate is up +39 bps to 2.74%.

The new ANZ two year rate is 2.90% and a +31 bps rise, while their 3 year rate is now 3.24% and a +25 bps rise.

ANZ is New Zealand's largest home loan lender, and it has never really had much to offer borrowers in the four and five year region. They made no change to these longer rates, but that did take the difference to a slightly lower level when compared to ASB.

Westpac has also taken some lower rate settings than ASB at the long end.

Of course, as with any bank, you can probably negotiate better rates (lower than these carded rate levels), depending on the strength of your own financial position.

Kiwibank has yet to announce their changes. We would expect these sometime early next week if they don't come today. So the window of opportunity to grab bottom-of-the-cycle rates is very short now.

Most of these banks have also raised some term deposit rates at the same time.

Now that we are in a mid-Winter real estate season and sales volumes are falling away somewhat, now is a good time for bank pricing managers to push through rate increases. Even if they overdo it, it will allow them to offer 'specials' and 'discounts' when the Spring real estate season kicks off - in only about eight weeks from now.

One useful way to make sense of these changed home loan rates is to use our full-function mortgage calculators. (Term deposit rates can be assessed using this calculator).

And if you already have a fixed term mortgage that is not up for renewal at this time, our break fee calculator may help you assess your options. Break fees should be minimal in a rising market.

Here is the updated snapshot of the lowest advertised fixed-term mortgage rates on offer from the key retail banks at the moment.

Fixed, below 80% LVR 6 mths   1 yr   18 mth  2 yrs   3 yrs  4 yrs  5 yrs 
as at July 16, 2021 % % % % % % %
               
ANZ 3.39 2.50

+0.31
2.74

+0.39
2.90

+0.31
3.24

+0.25
3.99 4.39
ASB 3.29 2.55 2.79 2.95 3.29 3.69 3.99
3.29

+0.30
2.55

+0.36
2.79

+0.44
2.95

+0.40
3.25

+0.26
3.69

+0.30
3.99

+0.30
Kiwibank 3.55 2.19   2.55 2.99 3.39 3.69
Westpac 3.29

+0.30
2.55

+0.36
2.75

+0.30
2.89

+0.30
3.29

+0.30
3.49

+0.10
3.79

+0.10
               
Bank of China  3.45 2.15 2.15 2.55 2.75 3.05 3.35
China Construction Bank 4.70 2.65 2.65 2.65 2.80 2.89 2.99
Co-operative Bank (*FHB only) 2.19 1.99* 2.39 2.59 2.99 3.39 3.69
Heartland Bank   1.85   2.35 2.45    
HSBC 2.79 2.09 2.19 2.49 2.79 3.19 3.49
ICBC  2.89 2.15 2.15 2.35 2.75 2.99 3.19
 SBS Bank 2.79 2.19 2.39 2.49 2.79 3.09 3.39
 [incl Price Match Promise]  2.89 2.19 2.35 2.55 2.99 3.39 3.69

Fixed mortgage rates

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Daily swap rates

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Opening daily rate
Source: NZFMA
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Source: NZFMA
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Source: NZFMA
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Source: NZFMA

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93 Comments

Westpac too.

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What are they trying to do? Rushing more people into buying now!?

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Good. All these macroprudential tools trying to cool the ridiculously overpriced housing market were just tinkering around the edges. Everyone knows that the MAIN reason house prices are stupidly high is because interest rates dropped off a cliff. If kiwis can borrow more for housing then you bet your bottom dollar they will. Higher interest rates is a big part of the solution.

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True. Something has scared Mr Orr, maybe it’s that our property market is so over cooked you can smell the carbon on his breath.

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That's why I believe they need to raise the OCR now. We can not afford to just wait on US fed and leave it last minute. Our economy is very different from US economy. Our housing price has increased 30% within one year, which makes New Zealand becomes the country had biggest housing price increase in the world. If we act now, we still can gradually increase it so it won't crash the housing market. Lets face it, a 25 basis points increase will do nothing to the housing market but might be able to cool it down a bit which is what we need at the moment. It also can send the message out to warn people that low interest rate era is close to end, we need to speed wisely and start paying off our debts.

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"If we act now, we still can gradually increase it so it won't crash the housing market.. "

The NZ fantasy...that we are different.

A bubble always pops and this one will to.

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I really hope the crash won't happen, cause when it does, it's gonna be big. It's pretty sad to see people intent to forget what happened in Japan and during GFC.

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Yeah but if you mention any downsides to speculative mania in a housing market (in NZ), you get bullied as a 'doom gloom merchant'.

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The time for action was a year ago and the central bankers did exactly the WRONG thing.

It's time for some people to learn what the phrase "unsustainable house prices" actually means.

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Interest rates are not the main cause of house price inflation. Look at 2006-2008 - rising rates to 11% while house prices inflated.

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Wages were also rising at that time by approximately 5%. Wage rises since have been consistently under 2.5% for the last decade.

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Did you really just point to a two year period that started 15 years ago?

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Back then, banks were offering 100% mortgages if you had a high enough income.

Hardly relevant to today's landscape.

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The relevance imho is in pointing to the willingness of banks to throw money around. It's cash availability rather than interest rates that drive prices.

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True. However, the interest rates also govern the amount of cash they're 'allowed' to throw at buyers, thus lower interest rates are material when it comes to driving prices.

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When affordability is pushed to the limits then lowered cost of borrowing, all things being equal, will push prices up.
Price to income ratios weren't great in 2006, but at least they weren't absurd. And as others mentioned, at least wages were increasing at a good clip

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Nothing good in it, as they have only given a warning which we are hearing from last 6 months, interest rates are still not increased and I don't think so it will raised to the level where it disrupt the market.

Keep hoping nothing will change, there is still room for increase in house prices.

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Reserved 2.19 with ANZ yesterday phew!

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I did the same earlier in the week. My 2.99% for 5 years I fixed late last year seams to have been a good move. Better than my fixed at 9% years again and having to watch rates drop to 6%.

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Reserved 3.05% for 4 years over a month ago, comes into play end of this month. I hope they don't pull out at the last minute!!

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I hope my landlord got a good deal

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As I made it clear yesterday to counter some wishful thinking by a few housing specuvestors, I highlighted that ASB was simply the first one to acknowledge reality, and that the other banks would have followed in short order.
I don't claim to be a financial Nostradamus, as absolutely anybody without real estate blinkers on could have clearly seen the writing on the wall. And this is just the start, folks. An OCR raise next month looks quite likely too. Good first moves to re-balance the economy and heal from the current dangerous and ridiculously reckless ultra-loose monetary policy.

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Yup rates will rise, but looking more medium long term i still think we are at a period similar to 2008 where rates were rising and eventually the whole thing crashes as there is too much debt and how does the world deal with that...? We take rates lower. This time to absolute rock bottom. OCR at -1% and massive massive QE everywhere.

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Agree, and something I have said many times before.
I wouldn't panic. We will be at a negative OCR within 3 years.

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It doesn't simply work like that way. In order to bring a high OCR to be negative again, we will need to go through another economy recession. Based on the current situation, that won't simply happen after another market crash. At the moment, I believe we either need to deal with inflation or stagflation.

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In a way the little rate raises will stabilise the market, not a bad thing for the market really.
Kinda like pouring cold water in when you are cooking spaghetti just prevent boiling over.
Bank knows best, they are not in to destroy their business.

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Can I make a suggestion for improvement? It would be useful if the table showed *how much* the rates changed by, rather than just the direction. So rather than just having an arrow to the right of the figure, you could have something like "2.90 (+31)". Cheers!

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Good idea! Thanks.

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Thank you!

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I notice you are trying to minimise the whole thing

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Wow that didnt take long-and all before todays CPI read.

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Will Stats New Zealand provide a little more fodder for the banks this morning or a curve ball.

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Things could get interesting over the next few months.

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Put on those seat belts. This is just the beginning of the end of low interest rates. Many buyers have only known dropping interest rates. This is the real world.

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"This is the real world." - as long as the money printers go brrrr its la la land

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Cue another round of DGM crash predictions!!! Who is going to call for a 10% drop by Christmas first??? Mike Kirk you have been unusually quiet of late.

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Such a valuable comment. Did you really just comment to make a personal attack?

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10%... Nah the DGM squad want 30%. Lol

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Prepare for declining asset values and rising inflation of the necessities.

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As interest rates rise house values drop. People have to factor in extra interest costs when they make an offer.

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When you have the banks of mum and dad plus children all throwing everything at the property market, we have a problem.
We need (for the good of the economy) to take the hit!

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I could not agree more. An old villa just sold for over 3 million in a provincial capital. Nuts. Auckland buyer of course . Had to have it. After all COVID is here to stay. Cannot travel so need to spoil oneself.

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It's crazy how many people here are wishing for a housing price crash.

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Why? Slightly more than 50% of adults don't own realestate, a large number of adults couldn't own less. Amongst those that do a majority are living in the one house they own and can see the gains are only paper but those gains are having far reaching negative effects on society in general.
No surprise really.

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There's simpler ways to tackle your issue of home ownership. Restrict # of house purchases per citizen. Easy as. But of course, no one will want to make those types of bold moves.

Singapore has proven with a sound government that every citizen can own their own home and still have appreciating assets. Don't need one or the other. But of course no one wants to do the hard work.

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Run for election. I'll vote for you if you run on a platform of make NZ like Singapore.

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Thanks for your vote!!! But too bad noone else will vote for me

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NZ needs a Lee Kuan Yew. All we got is Jacob Zumas up in here.

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Hardly, considering the amount of hard working people left behind from crazy asset price inflation.

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So the solution is to screw the FHB's who worked hard for many years to get into the market these last 12-18 months so that the others can participate in the party? Zero sum game. You can't have it all.

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So what you're saying is that we should save the people who bought 12-18 months ago, but destroy the hopes of all the others who haven't bought yet? Many have said here before that the virtual price of your house is meaningless if you're not planning on selling. Why would those FHB's want to sell?
And even if this meant screwing 0.1% of the population, how does that compare to the 10-20-30% or more who have lost all hope?

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I'm not saying it's right or wrong. I'm saying it isn't surprising.

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It's crazy how many people don't.
Do you realise how bad the long-term (socio-)economic effects of the current situation will be? Are you happy with the backbone of society (skilled workers) leaving NZ because they've lost hope of ever owning their own home here?

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They leave not because they can't own a home. They leave because NZ is seen as a small market and earning potential is limited. If you look over to the Oz, their earning potential is significantly higher for the same skilled work. That's because they of course have scale in terms of population and supply/demand, but still a reason why people go.

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Well, I know several professional couples in their 30s who left solely because of unaffordable housing. Anecdotal evidence I guess... Brisbane median house price is 60% of Auckland's. Salaries are only 10-30% higher. Guess which one makes a huge difference.

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Its the combination. Paid more with cheaper houses... it's a win-win.

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I'm skilled and literally leaving due to not being able to own a home.

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I know of a few who have just moved to OZ. Couldn't justify buying a house in NZ and is trying in OZ.

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Does earning potential and house prices not kinda go hand in hand to a degree? Yet there's a massive disparity.

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I know a whole family clan that pulled out of AKL recently and headed to Brisbane - the numbers stack up way better. And Oz has a massive ponzi too - says something about the state of NZ.

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I recently got pre-approval for finance over there. Was much easier than I expected.

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People leave because they are not happy wherever they are/go. It’s all in the mind set.

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This Govt. is too timid to take any strong action to stop this madness. There are many Properties which got sold double the price comparing to 2019 but govt. is not able to see that. It is morally corrupt govt. with people full of self praise like our beloved Queen. SHAME

Someone who is looking for first home should move to Oz great potential/salaries, better life & affordable homes in many good cities.

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I locked in about 80% of my investment debt for 5 years 3 months ago.

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Has anyone considered that the housing prices are appreciating simply because people around the world believe NZ is a great place to live and want to move here to enjoy the scenery and lifestyle living?

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It's a factor, but only one of many.

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Many overseas own empty houses in NZ - and probably cannot fly here at the moment. Lost of example's in Oriental Bay Wellington and North Shore Auckland.

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That's an assumption rather than a fact. There is no evidence shows people around the world want to move to New Zealand and live here. New Zealand is great, so are other countries.

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FBB? Also, do you realise how difficult it is to get permanent residency in NZ? (Unless you're cheating, but I don't think it's the Indian 'chefs' and dairy managers buying houses en masse)

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If you're rich PR is a cake walk

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Europe and North America have scenery that blows New Zealand out of the water. Lifestyles too, depending on where you go. At MUCH more affordable prices.

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So now the banks have got hold of people by their neck, first by giving lots of money to them at cheap rate and now they are squeezing it slowly but they will not kill you. They will sequeeze people like we juice a fruit.. I am not sure if i am guessing it right but people take a debt for 30 years but they only see the debt installments on yearly basis at the yearly rate. Do they think it will be low like that for next 30 years? Do they think how much interest they are paying to the bank every year and how much of it is the principal?

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Partial truth. I mean nobody forced them to borrow eye watering amounts. Price is a price, you don't have to hit it.

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Like I said in 2019.

by Nzdan | 14th Nov 19, 7:05am
Banks probably want interest rates to rise after a prolonged period of increasing loan book size. A bait and switch of sorts. Get everyone juiced up on low lending rates and then tighten up the vice on the balls.

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Aug OCR lift is a done deal - inflation has exceeded all expectations - most were expecting a .8-.9% lift in inflation for the qtr - making the FY number 2.8-3.0% - number has come in at 1.5% for the quarter resulting in a full year inflation of 3.3% - above the RBNZ's band of 1-3%.

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my apologies- its a 1.3% lift for the quarter. Hit the 5 instead of 3 :(

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my apologies- its a 1.3% lift for the quarter. Hit the 5 instead of 3 :(

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This actually matches my prediction and expectation. I was predicting / expecting somewhere between 3% and 4%. It can't be just 3 or high 2. Even the “Non-tradable” inflation hit 3.3%, that is the only surprise to me.

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Its not 3 or 4% though is it, the real inflation is at least 10% so hell yes its time to act. The CPI must have been designed not to panic the sheeple, it still doesn't move even when the shit is clearly already hitting the fan.

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Sure it is...

"The Committee reiterated that there will be near-term spikes in headline CPI inflation in the June and September quarters. These reflect factors that are either one-off in nature, such as high oil prices, or expected to be temporary in duration, such as supply shortfalls and higher transport costs."

" The Committee noted that medium-term inflation and employment would likely remain below its Remit objectives in the absence of some ongoing monetary support. However, the Committee agreed that the level of monetary stimulus could now be reduced to minimise the risk of not meeting its mandate."

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Watch more properties hit the market. Fear is a terrible thing. It makes people do some interesting things. People have been greedy and they will suffer the consequences. A god time to be mortgage free.

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People are not going to sell, they are all looking for a hard asset in times of crisis. Its not rocket science, a shit storm is coming in financial sectors.

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The Banks might have something to say about that. If you have given the Bank a mortgage they control you.

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But if you're in negative equity it's better for them to keep you locked in if you can still make the payments.

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In times of crisis, cash is king. Certain assets are good too, but must be debts / mortgage free.

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That's conventional wisdom.

Now we have print happy central banker criminals.

In times of crisis, your cash becomes trash.

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I wouldn't want to be holding a hard asset with a mortgage over it where interest rates are on the move. A rental with a $500k mortgage at interest only would currently cost $12k in interest. If rates increase 1% then that's $100 per week. I can't see tenants being squeezed for that somehow, otherwise why isn't the landlord already charging it?

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How will immigration reset affect rental market.
Less people in-flow and with new housing supply coming on stream.

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There are over 3000 FHB taking out mortgages according to RBNZ C31 every month, and a similar number of investors. Assume half the investors are buying from other investors, then only 1500 per month added to rental stock (that's just the ones with mortgages). Similarly assume half of the FHB are couples leaving their own rental (with no flatmates, anecdotally I know heaps of people like this), freeing up another 1500 properties. (1500x2) x 12 = 36k additional rental properties available in 12 months.

25 years ago NZ births were 57k per year. That's 15k rentals needed at 4:1 occupancy. 36k - 15k = 21k surplus.

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Real recession will hit, they will drop the rates again.

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Broke my 2.35 1 year fixed term with Kiwibank today (ending Feb 2022) and re-fixed at 2.55% for 2 years. If it pays off we've avoided getting a 2 year fixed term in February at something over 2.9%. If it doesn't and the OCR stays at 0.25 until next year not such a big loss. The great thing about breaking a fixed term in favour of a higher rate is that the break fees are 0.

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Given their latest announcement you might want to give them a call :)

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LOL. Yes. Hit save on the above post and saw the breaking news. I was still on the phone to confirm (2 step process) so I'll politely decline. Their big backlog in calls has saved me money.

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