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The largest mortgage lender pushes through new chunky increases, raising rates to new recent highs. At the same time ANZ raises term deposit rates substantially

Personal Finance / analysis
The largest mortgage lender pushes through new chunky increases, raising rates to new recent highs. At the same time ANZ raises term deposit rates substantially
Rising rates
Source: 123rf.com Copyright: reziart

Seven percent mortgage rates are imminent.

ANZ, New Zealand's largest home loan lender, has raised its five year fixed rate by +50 basis points to 6.95% in sweeping changes across their rate card.

All ANZ's new fixed rates are now market highs.

The bank has no carded offers below 5% anymore.

Its new one year fixed rate 'special' is 5.35%, also a +50 bps jump.

The new two year fixed rate 'special' is 5.80% and a +45 bps hike.

The new three year fixed rate 'special' is 5.99% and a +34 bps rise.

At these new levels ANZ has put some considerable distance between itself and its main rivals, space those rivals are very likely to take up soon.

These hikes come after sustained wholesale swap rate pressure, but also as wholesale markets hesitated Monday, a hesitation that has now extended for the past four trading days.

Ironically, this ANZ move has well covered the Co-operative Bank's mistaken jumbo rate hike earlier in the day, one the Co-op Bank has now corrected. If the main banks all fall into line with ANZ, the Co-operative Bank's new rates might actually look appealing to borrowers who are about to re-fix.

Re-fixing is now where the mortgage market is focused. These re-fi (refinance) transactions look the most appealing to banks when the underlying real estate transaction activity goes into hibernation, as it is at present.

As well as bumping up mortgage rates aggressively, ANZ has raised term deposit rates (TD) sharply too. We will have more on these changes separately, but you should know that ANZ's new six month TD rate was raised by +25 bps to 2.75% and its one year TD rate was raised by +50 bps to 3.65% pa. At very long (and not popular) end, they now offer 4.10% pa for three years, 4.30% for four years and 4.40% for a fixed five year term deposit.

One useful way to make sense of these changed home loan rates is to use our full-function mortgage calculator which is also below. (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. But 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 June 21, 2022 % % % % % % %
               
ANZ 5.35
+0.40
5.35
+0.50
5.65
+0.50
5.80
+0.45
5.99
+0.34
6.85
+0.50
6.95
+0.50
ASB 4.95 4.85 5.09 5.35 5.65 6.35 6.45
4.69 4.85 5.09 5.19 5.65 5.89 5.99
Kiwibank 5.10 4.85   5.19 5.39 5.55 5.79
Westpac 4.85 4.85 5.09 5.19 5.49 5.79 5.89
               
Bank of China    4.45 4.80 5.10 5.40 5.70 5.90
China Construction Bank 4.35 4.45 4.85 5.19 5.45 6.15 6.35
Co-operative Bank
- revised
4.85
+0.36
4.85
+0.36
5.15
+0.22
5.35
+0.16
5.65
+0.20
6.35
+0.60
6.45
+0.50
Heartland Bank   4.40
+0.22
  4.90
+0.06
5.10
+0.15
   
HSBC 4.79 4.69 5.04 5.29 5.54 5.94 6.04
ICBC  4.39 4.45
+0.06
4.85 5.09 5.45 5.69 5.89
  SBS Bank 4.65 4.55 4.89 5.19 5.39 5.79 5.95
  4.45 4.34 4.90 4.99 5.35 5.55 5.75

 

Fixed mortgage rates

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Daily swap rates

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Comprehensive Mortgage Calculator

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140 Comments

Whatever happened to the 7% mortgage rates guaranteed poster?

Up
23

Got hired by interest.co…

Up
14

Changed their username 3-4 times. Currently buying new undies by the 20-pack.

Up
8

I think it's cowardly of commenters to change their username

Up
4

Why?

Up
1

Because it's used to hide, by people with no integrity. 

Up
4

Didn't the 7% poster say by the end of the year? If so, then the poster's timing was a bit off (who'd have thought!?) as we haven't even passed mid-year yet.

Up
14

The house price correction starts now.........no stopping it this time.

Up
7

I think he said it was -30% by Christmas.

Up
6

Ah, I think you're right, Brock. I can't believe 7% and -30% sounded so unlikely just three or four months ago.  At this speed, Auckland is bound to reach -30% before Christmas.  

Up
4

Didn't someone in the comments warn us of 7% interest rates this year?  I can't quite remember, perhaps they didn't reiterate their point enough

Up
21

Dont forget those 4 and 5 yr ANZ rates aren't the real rates, they just don't publish their 'special' rates for 4 and 5 years.  The real ANZ 4yr rate was 0.5% below the published rate before this rise, so probably still 0.5% below the rate above.

Up
1

Pretty sure it was only 18mths ago the RBNZ Governor was asking banks to go out and lend and encouraging people to borrow while rates were low … can’t imagine he’ll issue the lost generation an apology when they fall into negative equity (if they’re not there already). 

Up
24

Borrow and put it on the maximum term possible....duh

Anyone who fixed lending for under 3 years in 2020/21 deserves an uppercut.

Up
2

I read somewhere that 80% of lending was two years or less. My mortgage broker tried to talk me out of fixing for three at 2.69% - wish I’d gone 5yrs at 2.99%!

Up
9

In retrospect, a lot of these brokers probably only have experience of a very kindly supported market that only ever goes up. Familiar characters from Taleb's writing.

Up
4

That's because mortgage brokers want you to fix for 1 year and then come back and refix through them - easy quick cash for minimal work. I've come across people that have literally been told by their broker they can only fix for 1 year. There's a lot of scum out there.

Up
6

Yes and he also said that those complaining about low TD rates should put their money in the sharemarket.

Up
12

The damage done by Orr and the RBNZ in the last 2-3 years to the long term health of the NZ economy and financial system will be remembered for many years to come. These clowns would be funny if they were not so dangerous. 

Up
24

"Path of least regrets."

Up
2

One might get the impression they are trying to ruin people deliberately.  Hiking rates into an already falling market??

To fight inflation that has been caused by bouts of money printing, how could this monster inflation possibly be stopped via interest rate hikes?? 

The best thing now would be to allow inflation to run its course. 

But, again, one might get the impression they are out to destroy the economy. 

Up
1

Because when the cost of money increases, eventually the wider system will use it less.

Less volume of transactions, less demand, lower inflation. 

Higher rates world wide also mean we need to keep ours higher in order to keep the nzd stable (high), lower nzd = cost of everything increases (inflation) 

They want you to stop spending money, though only to the point of recession, then you can spend again... 

Up
3

Congrats to all those who took out 3% 5 year fixes last year.  Had to regretfully give mine up in December.  

Currently 6 months in to a 4.95% 5 year fix.  If rates do ever drop below this again, I'll gladly entertain the idea of breaking to a lower rate.  I wouldn't want to be 6 months in to a 1 year or 2 year fixed period.  

Up
8

I guess I now know why ANZ wouldn't budge on their rates for our broker.

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1

Despite having a 50% cash deposit (Deed of Debt) to bridge our purchase, they insisted we use a portion of that to settle the previous mortgage.  

I think we managed to screw them back slightly, by drawing down the maximum we could borrow with 1/3rd of the balance on a flexible facility, taking the $5k cash contribution and then 2 weeks later clearing the flexible facility with the proceeds from sale.  I believe the Cash Contribution would have otherwise been $3k to $3.5k.  2 weeks of interest was roughly $200 @ 3.95%.

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0

Good call, already rolling the car into it, and an $80k revolving facility I'm unlikely to touch.  But the cashback is on the total size of the facilities so should end up a couple grand ahead. 

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1

Yeah, thanks, I’m pleased I did. Should have sold all my shares at the same time…..

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0

Break costs charged by a bank should make that prohibitive to you i.e. there should be no free optionality

Up
0

That guy who spammed the comments with "7% mortgage rates guaranteed" will be feeling pretty smug right about now haha

Up
18

Feeling smug while crying into his rent increase letter?

Up
4

This made me laugh. 

But seriously, landlords are in a bind because with the number of people leaving for overseas and all those houses being rented instead of sold, there isn’t a shortage of rentals to enable a rent increase.

I guess the landlords could sell their rental in a falling market….

Up
20

Yes I get the feeling certain people believe that landlords can never take a loss on their investments (i.e. they are completely, 100% riskless) because either the customer or the regulator carries all of their risk for them to prevent these losses from ever occurring.  

 

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15

Risk? They have never had a leak that can only be fixed by replacing the roof.

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0

Wait, you mean they have to pay for major maintenance and put extra cash into their mortgage? Wow, I missed that in the tax free capital gains/houses only go up pamphlet.

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7

They'll just increase the rent and the tenants will pay.  Isn't that how it works?

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2

These delusional specufestors are in for a very rude awakening.  

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8

Aside from some parts of Auckland, there's still a fairly strong demand for rentals.

And 2022 will likely see migrant gates flood open. 

This is going to hurt the people with nothing, or less than nothing the most.

 

Up
11

Sounds like a shallow threat...the kind where you attempt to force blood from a stone. 

"Hey you poor person that doesn't own a house....look, I took on too much debt to buy a rental and mortgage rates have gone up, so you are going to have to cover my losses....sweet as eh?"

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32

Im just saying, that along with all the frothing at the mouth people might want to have at a handful of over leveraged landlords that'll come unstuck in the near future, is the sad reality that the poor are about to get a lot poorer, and the games going to keep getting played for a while yet.

 

Up
7

Ah yes the migrant flood to rescue us, coming any day now

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3

Who'd have thought NZ is still one of the better places to be.

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4

It's better than most of the third world.   That isn't setting the bar high.

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11

We seem to get way more permanents from the UK than the other way round.

I realise that's not that much higher a bar, but the bar all round isn't actually that high chief.

Up
4

I suppose New Zealand makes a nicer retirement village than Blackpool.   The numbers will differ for working age people.

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4

Yeah we don't know what your selection criteria is, although NZ had been fairly popular for poms of all ages for a couple hundred years.

For working age people (who need to work a local job), you'd be encompassing in large amounts of Europe as being worse. Italy, Spain, Greece, most of the countries in the East.

Maybe like Luxembourg or Monaco is good, if you've inherited money and/or property there? 

Up
3

It's a much better life in Barcelona or Milan or Budapest than Whangarei, Hamilton or Porirua.

Different strokes for different folks though, if you enjoy boredom, poverty and Mahuta standards of beauty, then New Zealand is just the place for you!

Up
14

The average millennial in Spain or Italy is worse off than the average millennial in NZ.

You're confusing "nice places to visit" with "better places to live".

Up
8

The unemployment rate in Spain is 13.5% and their average income is our minimum wage. I believe it's a smidge better in Italy, but still pretty depressed. 

Not much of a surprise their housing situation is also sadder.

Up
9

You seem confused.  Their housing situation is sadder now because its cheaper relative to income?

Your money goes a lot further in Italy or Spain.

So does your EU citizenship.

Up
6

Their lower house prices relative to incomes are indicative by the overall level of malaise in their economies, and less so an indicator of better living conditions.

My money goes a lot further there, because I'm not Spanish or Italian.

So I guess the take-home is the world is your oyster, if you're Anglo-Saxon.

Up
6

Their lower house prices relative to incomes are indicative by the overall level of malaise in their economies

This is utter nonsense.  Try building your argument up on facts instead of fiction.

Up
5

All things being equal, an economy with higher employment and wages will have higher prices than one that is lower.

If you look at places with the lowest prices relative to incomes, they're usually pretty dire places to exist economically.

Anyway, piles or slab down yet? Only 3 weeks for me then ✈️✈️✈️👍👍👍✅✅✅. Although I'm a dumbarse, I like moving to a house that already exists.

Up
5

All things being equal, an economy with higher employment and wages will have higher prices than one that is lower.

This is correct.

If you look at places with the lowest prices relative to incomes, they're usually pretty dire places to exist economically.

This is economically illiterate garbage.  There is no correlation whatsoever in "dire economic existence" in the house price to income ranking provided below.

https://www.statista.com/statistics/237529/price-to-income-ratio-of-hou…

House is progressing splendidly.  It's unfortunate that you are still stuck down there for three more weeks.  No wonder you never miss an opportunity to project your small **** syndrome.

Up
1

This is economically illiterate garbage.

There's a lot of places round the world where you can buy property for far lower price:income ratio than the small list of 33 places you keep posting. Generally, the lower you go the worse the area.

Your initial summation was places with better price:income ratios offer a better quality of life, on its own that indicator isn't the best yardstick. But I guess it's the only one you had, and reasoned debate isn't one of your strong suits. 

Not sure why you're so salty with all the splendid progress, I'd have thought you'd be perking up the closer you get to paradise.

Up
4

So you are unhappy that the OECD data doesn't support your economically illiterate assertions?  Your argument is demonstrably false and the evidence has shown it.

Your vapid bluster and "reckons" is not evidence of anything much except that you have no idea what you are on about.

The med is quite salty, but I'm having a great time in the European summer at the moment ✈️ ✅. 

Isn't it well past your bedtime now?

Up
2

So you are unhappy that the OECD data doesn't support your economically illiterate assertions? 

The data is fine, my comment was relating to the wider world, but it also is relevant to your list, to varying degrees.

You're having a great time in the European summer still being a prat on an NZ economics site? Sounds just as lame as if you were in Whangarei. 

 

Up
2

You have provided no data.  And any data you do eventually provide will be skewed because the countries are not developed countries.  That's why we do OECD comparisons.

Being a skilled professional , I'm working remote in the summer for a bit. 

It's nice to give my mind a break every now and then by indulging in low IQ conversations with some of the characters on here.

Up
6

Brock, I can guarantee the fishing is 100% better in Whangarei than Barcelona, Milan or Budapest......  shopping and dining, not so much.

Up
2

Fast tracking visa numbers…

5 million isn’t a huge number to replace if they are desperate.

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0

Very unlikely - I actually see a much greater chance of people leaving NZ rather than migrating here. The only way to make NZ attractive to migrants, especially if compared to AU, is to have housing in NZ come down to sustainable levels - and in order to achieve that, houses have to come down in price by at least 40% min.

Up
23

NZ is attractive compared to Oz for those migrants who do not qualify for visas to Oz. Oz has some serious requirements of their migrants.

Up
6

People are still leaving.  June currently a 13k loss on the borders, on top of the 31k loss so far this calendar year.  And 31k last year.  And the 36k in 2020.  So that's 111k more people that have left than arrived.  3.9 average occupancy rate for a rental = 28,000 empty rentals.  

  • Jan - 6.7k loss
  • Feb - 8.3k loss
  • March - 6k gain
  • April - 16k loss
  • May - 6.4k loss

https://www.customs.govt.nz/covid-19/more-information/passenger-arrival…

Up
14

June looks to be a large loss month and it is not even school holidays yet.

 

Up
2

Argument assumes all net departures are permanent, and the individuals are renters.

Up
3

Of course.  Without that information we can only speculate I guess?  But let's work on 1/3rd (2/3rd are home owners in this country) then that's still 9k rental properties worth of people that are at least temporarily out of the country. 

It wouldn't be too far fetched to assume the ratio of "renters" that are out of the country would be higher than home owners, as they seek home ownership opportunities elsewhere, but that would also be speculation.  

Up
6

We cant really work on much, because

a) outbound tourism/emigration from NZ is only just coming back, with 24 months pent up demand

b) unencumbered inbound traffic is even newer

C) reading much into anything over our winter is folly. It could be 90% home owners going to Raro, or 90% renters escaping inflation and recession in *insert hypothetical country*

D) not every renter leaving is doing so permanently, not are they guaranteed to be a lease holder and not a flatmate.

I guess when we see available rental properties skyrocket on trademe in the coming months, we'll know whether the prophecy holds water.

Up
3

Exactly.  We can't really work on much, but it doesn't mean we should discount the numbers.   

I mean, I've got nothing to lose. I'll keep periodically looking at the customs border movements, CCC certs, interest rates movements etc and chiming in with my thoughts. I can't help but wonder if your comment is driven by wishful thinking and vested interests.  
 

Up
12

Marketing a property for rent at the moment. Was nervous that interest would be low and rent might have to drop. Posted ad Thursday night last week. Have had 6 parties come through with two wanting it. 4% rental increase.

Up
4

That was the point.  :)

But seriously, was looking on facebook and there are some Wellington landlords sounding a bit desperate.  Dropped rent and redecorated and still no decent applicants.   I'd shed a tear for them, but ..nah.

Up
24

They can cry me a river for all I care. 

Up
8

Aren't rents generally dropping YTD?

Up
3

They're definitely dropping where I'm looking... a whole new round of drops just this morning.

No new rental listings, however, so this undesirable will just keep waiting :P

But I had a quick gander at property for sale in the area: 15% less for sale, but a whole page listed for ~25% less than the previous cheapest a few months ago. I guess they've decided to stop obfuscating their desired price in the hoped they'll luck out on a sale.

Up
6

.

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4

Nice townhouse (2021 build) next to us has been vacant for three months

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3

I don't see why. Getting banned for repeatedly stating the obvious isn't much to feel smug about.

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1

I believe he was banned for pointing out that most of our convenience stores are owned by foreigners.  Unfortunately I didn't catch the whole exchange before it was deleted.

Such a shame.  He was a much more accurate prophet than Ashley Church.

Up
9

One of the commenter here, has been persistent with his forecast: 7% interest rate and 30% house price fall.

 

Up
6

Real Estate  agents sending below email to all in their mailing list - once again trying to create FOMO ( for them even if few gets trapped is a win for them).

Seriously, they believe that interest rate touching 7% and may go up further and they trying to create fear / panic - just like spam email, even if one gets trapped and click the attachment, their job is done.

Hello, 

After nine months of mortgage-lending pain, proposed changes will come into force on July 7, 2022, and have addressed some of the major pain points of the original version of the CCCFA.

If you are currently pre-approved for a mortgage, you have a month or two to snap up a bargain until buyers start to trickle back into the market.

And if your application was deferred in some way in the past nine months, it is time to get a budget together - you still need to show how you will control your spending in the future - but consider reassessing if you can purchase a property in July. You may find the conditions have changed in your favor.

Read the full article here 

https://www.oneroof.co.nz/news/41671?utm_source

Add to this the 5% deposit for First Home Buyers and we may see a small lift in the number of house sales next quarter. 

Up
5

Is that even legal?

Up
11

not sure about legal, but definitely laughable

Up
5

They are dreaming. Those buyers who couldn’t pass the CCCFA aren’t going to be setting new price records with their mortgages being stress tested at 7.5% and above.

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13

Just filling out the Web forms for refinancing to a new bank goddamn this shite is a lot worse than when we took out the loan in 2019.

Up
2

They're getting desperate over at OneRoof. CCCFA might have been the first pump on the brakes but interest rates are doing all the heavy lifting now and until they eventually decrease, property prices are gonna be in for a rough time.

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14

Be intererting to see what the new normal is for the ocr.. when they do drop surely it wont be to emergency levels and the economy will look very different. So hopefully house prices wont get back to where they were for a lomg time

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1

Hopefully things tank quite a bit more. Then bring in Dti that Orr was talking about recently, mentioned Nov this year. Lock out speculative exploitation for future generations world.

Popcorn.

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8

It would be really great if any crash was followed by a DTI to put a lid on things. Sadly I have no faith this will happen.

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13

I've been getting similar emails from estate agents. Shameless!

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3

Maybe if we turn the housing market off and on again it’ll work

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14

Reply back 

"is this qualified advice from a registered financial advisor, or just spam" 

Up
1

Nice! Or how about replying back: "is this qualified advice from a registered financial advisor, or financial advice from an unqualified, therefore illegal operator?"

Up
2

TD's slowly creeping up. Keeping an eye on the 4 and 5 year rates for later in the year/early next year.

Up
2

With ANZ now 4.4% 5 yr TD, Rabo and Kiwi will be 4.5 or 4.6 very soon.

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1

4.8% for 1 year almost guaranteed by Feb 2023 now. Anyone fixing now wants to be on a 6 month TD.

Up
0

That would be nice, 4.8% is around the tipping point for me whereby the after-tax return is higher than the interest I'm paying on my mortgage, so instead of paying more into the mortgage I can put it on TD and make some money back from the bank.

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1

Lol ANZ don't give a sh*t... are they trying to lose customers

Up
7

They probably are… they will offer specials to the customers they want to retain. But give the “like it or lump it” treatment to the ones they want to lose.

Up
4

I can’t help but feel the RBNZ has gone too far and too fast with interest rates. There are going to be a lot of people locking their wallets away when they have to refix, the economy is going to tank. But that is unlikely to drop the price of petrol, in fact a tanking economy will probably just devalue the kiwi more and make it more expensive. 

Up
3

I agree. It is a shame. Our monetary policy was excellent under Alan Bollard then we got fools 

Up
1

I really hate the “least regrets” approach. First, they race to the bottom. Stay there too long. Now racing back up. Stop with the least regrets and just do your job. Adrian “Inequality” Orr.

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2

The governor of the Reserve Bank of Inequality.

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7

I am very disappointed that no lending institution has had the wit to set a going mortgage rate of 6.66%

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10

6.66% and a $66 Hell Pizza voucher.  

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3

Wow. Oneroof has dropped prices back big time. They must be FPOOPin themselves.

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7

Our place just went up 20k according to homes.co.nz. Hard to see how considering  central Auckland prices have dropped massively. 

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0

Haha yeah apparently our place is worth $30k with a CV of 1.7 mil. Their algorithms must be highly confused with prices coming down. 

Up
0

And haven't paid off my mortgage I'm on the other side of the ledger - term deposits.

And all we can get right now ( for 1 year locked) is a measily 3.15% !!!!!!

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0

-30% by Christmas.   Guaranteed.

Up
9

Galloping inflation is swamping the western world now. 4th largest economy on earth Germany just pumped out a 33.6% PPI tonight, CPI will follow to a certain degree. Mortgage rates here will probably go to double figures by year end. 

https://twitter.com/Schuldensuehner/status/1538783414798716928

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13

33%.........unbelievable.

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8

How much of that is straight out energy price driven I wonder.  

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0

They will be banging on Vlad's front door with a panzer division very soon politely demanding that he gets the flock out of Ukraine and turns the oil and gas pipes back on.

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1

I wonder how many more Predator drones are going to be flying over Ukraine in near times.

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0

They don't need panzers, a simple phone call would get the gas flowing again. 

EU residents are now paying for thier Ukraine bandwagaon.

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0

The house price correction really starts now..........no stopping it this time.

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12

The problem is unfortunately you just can't bet against the FED. Structurally the system is broken, and if not for government intervention and stimulus, this would have ended a long time ago. I never thought after 2008 that we could have kicked the can as far down the road as we already have. There's just no way of knowing how much road is left and to what extremes governments will go. Savings rates are negative with inflation, which drives average people and baby-boomers/retired people into risky investments in order to chase returns. These people have no businesses being in an overinflated equity bubble and will get crushed during the next correction with no capacity to rebuild (retired, not physically capable of returning to work or earning an income). If you do the right thing and pre-emptively move to cash and a crash doesn't come because governments step in and stimulate/bailout, then inflation eats away at your capital, if you stay in the market you risk loosing 20-50% in a black swan event/collapse. We are living in very scary and uncertain times, all created by our Labour government in particular Orr and his cronies.

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4

Bizarre post. The first 90% seems to accurately describe the long run problem. Then the last sentence is weirdly disconnected feels.

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5

Sounds like some of the opposition social media spend has gone on trash talking bots.

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0

Tombo is a greens voter.  

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0

The problem is unfortunately you just can't bet against the FED. Structurally the system is broken, and if not for government intervention and stimulus, this would have ended a long time ago. I never thought after 2008 that we could have kicked the can as far down the road as we already have. There's just no way of knowing how much road is left and to what extremes governments will go. Savings rates are negative with inflation, which drives average people and baby-boomers/retired people into risky investments in order to chase returns. These people have no businesses being in an overinflated equity bubble and will get crushed during the next correction with no capacity to rebuild (retired, not physically capable of returning to work or earning an income). If you do the right thing and pre-emptively move to cash and a crash doesn't come because governments step in and stimulate/bailout, then inflation eats away at your capital, if you stay in the market you risk loosing 20-50% in a black swan event/collapse. We are living in very scary and uncertain times, all created by our Labour government in particular Orr and his cronies.

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1

I agree with a lot of this except for blaming the labour government. Look around the world, our government does not effect the whole world. Much bigger forces at play here, notably 10 trillion of printed money...........

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9

Yes this has been both a National and Labour issue....actually its been a failure of democracy as it appears powerless to a failing neoliberal economic way of viewing the world. Its like a blackhole that sucks in any ethical regulator or politician to actually do the right thing and show some real leadership (as opposed to taking the easy/can kicking option) 

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Is the possibility of " The great reset" a reality yet?

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More people need to get more desperate first.

Then they'll take whatever they're offered.

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House prices were on the rise, and yet builders/developers got into money troubles.

Like an unseen vacuum, buyers flocked in, celebrated each month end with wine, beer and song.

And suddenly, the credit taps went dry.

From FHB to investor, from investor to mega landlord, from developer to house speculator, activity stalled. Pondering which route to take.

A paradox.

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What is unfolding now was inevitable after the twenty year multi govt bull run. No one should be surprised and should have been arranging their affairs to ride it out once rates went to 2%. That means aggressively paying down debt, not maxing out on it.

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I'm sitting pretty with my big pile of cash. I can smell the desperation in the winds. The scent is growing stronger.. 

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Just as well the banks stress tested all those borrowers for last two years at 7%, what they didnt "bank" on was the 7 plus % of inflation.  

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Nope, banks were stress testing at "rates of around 6 to 6.8 per cent".  Oh dear, someone's gotta be stressing now..

https://www.nzherald.co.nz/business/revealed-the-rates-at-which-banks-are-testing-mortgage-applicants/CSNF6HZDIPH6O42WEO3PMY4RLQ/

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Two and three year rates 3.3% and 3.1% higher than I fixed less than a year ago, WOW !!!  Those who are going to have to refix in 2022 are going to hurt, A LOT !!!

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We kept a small segment on 1 year, renewing late this year. I'm in two minds whether to pay some of it down or just to wear the slightly higher monthly payment (not that much, it's not a big segment). Feels like carrying the debt across and retaining more cash might have some benefit to it, given the extra cost is (we're fortunate compared to many) not consequential.

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So you'd want to retain cash for what purpose… ?  In the hope to pick up a bargain?  I find it hard to justify not paying down debt which is going to cost you about 6% after tax

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Yes, mainly that or to keep a very large cash buffer.

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DO NOT fix for 5 years, RATES ARE GOING TO COME BACK, as the recession bites hard in 2023

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Yvil you don’t understand the easy money game is up even if a recession hits they will not go back to low rates it’s going to take a couple of years to get back to inflation around 2% 

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I fixed for 5 years in December, with repayments at a comfortable level.  I have 4.5 years of certainty.  

Would rather be in a position to negotiate lower rates/a break fee if the rates fall considerably below my current fixed rate, than trying to find an extra few hundred dollars a month increase in payments in 12 to 18 months time.  

That said, rates are now 2% higher than in December.  

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Good on you, fixing for 5 years in December 2021 is very different from fixing for 5 years in June 2022

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why would you want to pay a break fee?  The break fee is equal to the interest differential so you wont save any money on interest, but you have to pay the admin fee, so you are worse off.

The only reason i can think of to pay a break fee is in a rising interest rate environment, not when rates are going down.

Say last year you had 18 months to go, you might want to break that to lock in a 2.99% rate for 5 years.  Your 18 months comes out in the wash as the break free is equal to any savings you make over the next 18 months.  But then, if you have gambled correctly, in 18 months time you still have 3.5 years at 2.99% while otherwise you'd be refixing at 7%.

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I figured that might be the case.  Break fee aside, I think missing out on potential interest rate savings is the lesser of two evils.  Here's a pay rise, but don't enjoy it too much as in a few months time all of it and some will go towards your new interest rate.  

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While i agree that rates will come back down, the timing of it is far from certain, and I doubt they will rise then fall back below where they currently are in less than a year.   I'm hedging my bets, equal sized 2/3/4 year fixes, and minimum repayments.  Can direct extra repayments to the highest interest tranche as they roll over.

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