BNZ has placed a glass walled house containing shredded money at central Auckland's Aotea Square to promote its tailored home loans, which it says can help customers' deal with "avoidable" home loan interest.
The money in the house/box comprises $6 million worth of shredded bank notes removed from circulation by the Reserve Bank because of damage and wearing.
In a statement BNZ's chief marketing officer Craig Herbison said BNZ’s Tailored Home Loan can help "shred" up to $156,000 of interest off a $300,000 home loan, compared to a standard 30-year loan, by customers making small increases every year in repayments. BNZ's maths is based on a $300,000, 30 year loan loan at an interest rate of 6.74% per annum compared to a standard loan.
The bank says home owners are paying $6 million in home loan interest every four hours, based on Reserve Bank data showing housing debt of $191.6 billion at an interest rate of 6.5%.
BNZ says it's the only bank that lets customers make small automatic increases in home loan repayments annually. The bank says it wants to start conversations and raise awareness among homeowners about ways they can "shred thousands of dollars off their home loan interest."
"Just making small increases in your home loan repayments can make a huge difference to the total interest you end up paying over the life of a home loan," said Herbison.
The house will be in place from today until 10pm on Wednesday night.
8 Comments
Trust Bank in the 80s offered a reducing mortgage with very high monthly repayments which comprised large chunks of principal, and the $$ size of the repayments reduced each month, and a shorter term than a table.
But then in those days a typical term was generally 15 years anyway, which probably acted as a brake on prices and indebtedness!
You bet they are - how else to reduce the need to raise new debt to service outstanding interest rate burdens? - read my recent comment
Some action has to be undertaken to protect the already indefensible tribute deducted from citizen's incomes.
With a total pay package worth $4.1 million, ANZ New Zealand's David Hisco is the top-paid boss in the Business Herald's executive pay survey.
His remuneration for the 2013 financial year was a 14 per cent increase on the $3.6 million he received in 2012. Read more
I don't know about that. Just the other day our own RBNZ governor was going on about 30 year US mortgages. He did fail to observe that asymmetrical borrower prepayment/refinancing actions reduced the duration of such loans to single digit year spans following the advent of QE. Read more
In the Fed's own words;
The Committee’s sizable and still-increasing holdings of longer-term securities should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative. Read more
I have no intention of paying off my mortgage at any rate greater than min required by the 30 year terms set up when I took them out.
Interest is a fair and reasonable expense for the use of someone elses funds.
I am happy to pay 5-7% for the use of banks money.
I find it easy to out do this with my own investments which are more targeted, require more research (and if no research taken, a lot riskier) than what the bank is burdened with when it dishes out mortgages to every man and his dog for a solid but unexciting return of around 6%.
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