Interest rate increases?

[degrom]

So what is going to happen?

Is Mr Cullen going to increase the interest rates or not...

Views and opinions on the matter are all welcome!!!

[ManDownUnder]

So what is going to happen?

Is Mr Cullen going to increase the interest rates or not...

Views and opinions on the matter are all welcome!!!


Technically no - that'd be Bollard who does the dirty work but... yes... I fear.

Actually it's yes - confirmed (http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10443954)...

[degrom]

Technically no - that'd be Bollard who does the dirty work but... yes... I fear.

Actually it's yes - confirmed (http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10443954)...

LOL... Nice,who is gaining out of this?

Or should I ask what he is trying to attchive with this!!! (and is it working?)

[ManDownUnder]

LOL... Nice,who is gaining out of this?

Or should I ask what he is trying to attchive with this!!! (and is it working?)

He's a knob jockey with a single goal to keep inflation below 3%.

He just need s hug - COL!!!! hug the man - just till his eyes pop out and he shits himself ...

[Beemer]

Thank god we just refixed our mortgage at a lower rate than that!

[ManDownUnder]

Thank god we just refixed our mortgage at a lower rate than that!

Speak for yerself... bugger bugger bugger...!

[degrom]

So when does he beat inflation? (When the interest rates are at 15 or 20 %)

[cold comfort]

Does not make a lot of sense increasing mortgage suffering. Allowing banks to lend 100% mortgages (so greedy investors can leverage more rental properties) and continuing to allow non-residents to buy NZ land, pushing up prices are two other problem areas more in need of attention. Our beach house neighbour has just paid an obscene amount for their property and continues to live in the USA for 6mths of the year!

[Dave Lobster]

Why isn't there a law to stop foreigners owning property here?

[The Stranger]

Or should I ask what he is trying to attchive with this!!! (and is it working?)

He is trying to rein in inflation.
That is his job and the only tool the govt has given him to do his job is interest rates. So I don't blame him. The govt could look at other options.

[Swoop]

Why isn't there a law to stop foreigners owning property here?
With the new immigration laws, permitting non-english speaking migrants' to buy citizenship, what do you think they will do to "invest" their 20 million???
Buy property, perhaps?:yes:

Good old labour, f*cking up again.

[The Stranger]

So when does he beat inflation? (When the interest rates are at 15 or 20 %)

The higher the interest rates the more foreign money comes in to take advantage of the high rates. This creates demand for our dollar and pushes the value up. The higher our dollar is valued the more it hurts our exporters and causes things like unemployment etc as our manufacturers are unable to compete. Also the higher our dollar the cheaper imports get, this really doesn't help as it starts to undermine the interest rate rises i.e people tend to say "wow that new bike is cheap" and buy it anyway. Plus that doesn't help our balance of payments or our manufacturers if everyone is buying imported goods.

Another factor to consider is when is the next election? Even though he is in theory independent of the govt, Labour are not going to want to go into an election with increasing unemployment and people hurting from high interest rates. I'm sure they would rather see a small blow out in inflation.

In short, my bet is that he has gone as far as he will go before things really start to slide negatively.
But hey I could be wrong - it has happened before.

[degrom]

The higher the interest rates the more foreign money comes in to take advantage of the high rates. This creates demand for our dollar and pushes the value up. The higher our dollar is valued the more it hurts our exporters and causes things like unemployment etc as our manufacturers are unable to compete. Also the higher our dollar the cheaper imports get, this really doesn't help as it starts to undermine the interest rate rises i.e people tend to say "wow that new bike is cheap" and buy it anyway. Plus that doesn't help our balance of payments or our manufacturers if everyone is buying imported goods.

Another factor to consider is when is the next election? Even though he is in theory independent of the govt, Labour are not going to want to go into an election with increasing unemployment and people hurting from high interest rates. I'm sure they would rather see a small blow out in inflation.

In short, my bet is that he has gone as far as he will go before things really start to slide negatively.
But hey I could be wrong - it has happened before.


So do you think National is going to do a better job when the take over the government?

Or are they going to use our Kiwisaver accounts to buy more properties for them self's?

[yod]

dont care...i locked in 7.8% for five years about 18 months ago....:woohoo:

nuts to you mr bollard....

[The Stranger]

So do you think National is going to do a better job when the take over the government?

Or are they going to use our Kiwisaver accounts to buy more properties for them self's?

Isn't National just more of the same?
Personally I believe a radical shift is needed or we just continue with the same old cycles we have had forever. But Kiwis being what they are, we aren't likely to see one, they will continue to vote for the status quo then moan about the status quo. It's a bit like the definition of stupidity - doing the same thing every day and expecting a different outcome. By that definition, Kiwis are stupid.
So No I doubt National will be any better in this respect.

Kiwisaver - my heads been in the sand on this one, I know nothing. Except in principal I tend to trust me with my money more than I trust the govt with my money.

[Toaster]

So what is going to happen?

Is Mr Cullen going to increase the interest rates or not...

Views and opinions on the matter are all welcome!!!


It's Dr Bollard. Cullen (sadly still) is Finance Minister.

The OCR has risen to 8%.

[bane]

dont care...i locked in 7.8% for five years about 18 months ago....:woohoo:

nuts to you mr bollard....

well done on timing etc, but I think you've missed the point here...

Are you about to rush out and take a 100% loan and buy an investment property with interest rates of ~10%? No? then he's achieved what he wanted.

i.e. please (aka "FFS") stop borrowing money.


Unfortunately, its a big hammer that adversely affects investment in productive parts of the economy, but its the only hammer he has.

Some targeted measures at the housing market would help him - like a capital gains tax on investment properties, reduced tax effectiveness of investment properties.... but as it stands, he has no choice but to dampen the whole economy.

Just imagine if NZ invested its money in businesses, technology and R&D, instead of property... we might even have incomes that match first world countries!

[MisterD]

It's Dr Bollard. Cullen (sadly still) is Finance Minister.

The OCR has risen to 8%.

Ah yes, our esteemed History Professor....telling us not to spend money and all the while purchasing red tape for the health service by the container load.

[degrom]

well done on timing etc, but I think you've missed the point here...

Are you about to rush out and take a 100% loan and buy an investment property with interest rates of ~10%? No? then he's achieved what he wanted.

i.e. please (aka "FFS") stop borrowing money.


Unfortunately, its a big hammer that adversely affects investment in productive parts of the economy, but its the only hammer he has.

Some targeted measures at the housing market would help him - like a capital gains tax on investment properties, reduced tax effectiveness of investment properties.... but as it stands, he has no choice but to dampen the whole economy.

Just imagine if NZ invested its money in businesses, technology and R&D, instead of property... we might even have incomes that match first world countries!


I think it 's all bull!!!!

Say your house hold earns 50k a year. They will never be able to buy a house.(EVER!!!)

Okay,you can save for a nice deposit... 10 years!!!!

The averages house doubles it values every 7 years. (2x today's deposit).

I have a nice suggestion. Politicians and governments should take responsibility for their actions. If they screw up the Kiwisaver I want them hanged!!!

And if you are to lazy to vote then you should shut up!!!!

[yod]

well done on timing etc, but I think you've missed the point here...

Are you about to rush out and take a 100% loan and buy an investment property with interest rates of ~10%? No? then he's achieved what he wanted.

i.e. please (aka "FFS") stop borrowing money.


Unfortunately, its a big hammer that adversely affects investment in productive parts of the economy, but its the only hammer he has.

Some targeted measures at the housing market would help him - like a capital gains tax on investment properties, reduced tax effectiveness of investment properties.... but as it stands, he has no choice but to dampen the whole economy.

Just imagine if NZ invested its money in businesses, technology and R&D, instead of property... we might even have incomes that match first world countries!

no...you're confused over which point i'm aiming for...

[Hitcher]

So what is going to happen?

Is Mr Cullen going to increase the interest rates or not...

Views and opinions on the matter are all welcome!!!


1. Mr Cullen doesn't increase interest rates. Reserve Bank Governor Alan Bollard is the only person who can influence the Official Cash Rate (OCR).

2. Dr Bollard's performance agreement says he is to keep inflation under 3% per annum. He has few levers available to him to achieve this target. The most effective, albeit the bluntest of these levers, is the OCR.

3. Dr Bollard this morning decided to increase the OCR from 7.75% to 8.00%.

4. Because the OCR influences the price banks have to pay for their money, their interest rates will rise accordingly, particularly their lending rates.

5. There is at least one generation of New Zealanders who have no memory of the inflation rates of the 1970s and early 1980s that nearly killed New Zealand. When Mrs H and I bought our first property in 1987, we were paying 18% on our first mortgage and 22.5% on our second. Hire purchase and credit card interest rates at that time ranged from 33-35%.

6. The issue is whether or not you agree with the Government's objective of keeping inflation below 3%. If you agree, you shouldn't mind your costs of borrowing increasing. If you disagree, you shouldn't mind paying increasingly more for the goods and services you procure.

[steved]

dont care...i locked in 7.8% for five years about 18 months ago....:woohoo:

nuts to you mr bollard....
Group hug! :grouphug:

I fixed for five years at 7.99% 6 days ago! We locked that rate at just the right time.

[steved]

1. Mr Cullen doesn't increase interest rates. Reserve Bank Governor Alan Bollard is the only person who can influence the Official Cash Rate (OCR).

2. Dr Bollard's performance agreement says he is to keep inflation under 3% per annum. He has few levers available to him to achieve this target. The most effective, albeit the bluntest of these levers, is the OCR.

3. Dr Bollard this morning decided to increase the OCR from 7.75% to 8.00%.

4. Because the OCR influences the price banks have to pay for their money, their interest rates will rise accordingly, particularly their lending rates.

5. There is at least one generation of New Zealanders who have no memory of the inflation rates of the 1970s and early 1980s that nearly killed New Zealand. When Mrs H and I bought our first property in 1987, we were paying 18% on our first mortgage and 22.5% on our second. Hire purchase and credit card interest rates at that time ranged from 33-35%.

6. The issue is whether or not you agree with the Government's objective of keeping inflation below 3%. If you agree, you shouldn't mind your costs of borrowing increasing. If you disagree, you shouldn't mind paying increasingly more for the goods and services you procure.

Agreed. There needs to be more instruments to attempt to control inflation. The OCR tool is looking like it is losing power and interfering with other economic trends with the high OCR rate maintaining a very high dollar.

[Beemer]

Group hug! :grouphug:

I fixed for five years at 7.99% 6 days ago! We locked that rate at just the right time.

Ours was 6.99% for four years and when we refixed it we worried about whether to fix it for a long period again or not, but in the end we went for seven years at 7.77% so we're pretty happy with that. Less than one percent more than what it was before and less than the latest offerings, that's for sure.

[bane]

no...you're confused over which point i'm aiming for...

cool, interested in what I missed...

Bollard cant undo whats already done (i.e. you've already bought a house and locked in a good rate), but he can put measures in to stop others following. i.e. increase the cost of borrowing until you cant afford it.

no one should bemoan the fact that someone wants the security of owning their own house - and for the majority of people that means borrowing.
These people are caught in the crossfire when they renegotiate their mortgage - but the up side for Bollard is they feel less rich and hopefully reduce their spending.

His real target is investment property. Unfortunately for the overall economy, due to massive capital gain over the last 4 years, a shed lot of borrowing has gone into "investment" properties, which actually lose their owners money day to day (rents dont cover costs), instead owners are relying on continued capital gain.

Bollard could let this go unchecked, but as Hitcher has already pointed out, inflation rates of >10% do the economy far more damage, than tempory high interest rates.

[degrom]

cool, interested in what I missed...

Bollard cant undo whats already done (i.e. you've already bought a house and locked in a good rate), but he can put measures in to stop others following. i.e. increase the cost of borrowing until you cant afford it.

no one should bemoan the fact that someone wants the security of owning their own house - and for the majority of people that means borrowing.
These people are caught in the crossfire when they renegotiate their mortgage - but the up side for Bollard is they feel less rich and hopefully reduce their spending.

His real target is investment property. Unfortunately for the overall economy, due to massive capital gain over the last 4 years, a shed lot of borrowing has gone into "investment" properties, which actually lose their owners money day to day (rents dont cover costs), instead owners are relying on continued capital gain.

Bollard could let this go unchecked, but as Hitcher has already pointed out, inflation rates of >10% do the economy far more damage, than tempory high interest rates.

Makes sense!!!

Compared to capital gain over the last few years... How has the inflation picked up???

[yod]

cool, interested in what I missed...

Bollard cant undo whats already done (i.e. you've already bought a house and locked in a good rate), but he can put measures in to stop others following. i.e. increase the cost of borrowing until you cant afford it.

no one should bemoan the fact that someone wants the security of owning their own house - and for the majority of people that means borrowing.
These people are caught in the crossfire when they renegotiate their mortgage - but the up side for Bollard is they feel less rich and hopefully reduce their spending.

His real target is investment property. Unfortunately for the overall economy, due to massive capital gain over the last 4 years, a shed lot of borrowing has gone into "investment" properties, which actually lose their owners money day to day (rents dont cover costs), instead owners are relying on continued capital gain.

Bollard could let this go unchecked, but as Hitcher has already pointed out, inflation rates of >10% do the economy far more damage, than tempory high interest rates.

the point i was making was simply that the rate increase was of no consequence to me (cost wise) in the next few years anyway but it might screw my capital gain, the bastard!!


the govt has made noises about additional legislation re tax on investment properties - this is good imo, demand will decrease somewhat but gains will still be there for the longer term investor

"which actually lose their owners money day to day (rents dont cover costs), instead owners are relying on continued capital gain" - thats kind of the point; anyones cost of ownership tends to be a damn sight higher than renting so the ONLY point to owning property is the anticipated CG

all the govt needs to to do is make other investment options more attractive and educate investors about them (yeah simple i know...if only you all voted for me :laugh:)