Rawz..the reverse mortgage product how is it wonderful ?
% rates at 10 average.
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Rawz..the reverse mortgage product how is it wonderful ?
% rates at 10 average.
https://retirement.govt.nz/policy-and-research/retirement-income-policy-review/2019-review-of-retirement-income-policies/home-ownership
Today (2019), about 12% of people aged 65+ are still paying a mortgage, and the same number are renting.
They’re eligible for Superannuation, but Super wasn’t designed to cover rent – it currently pays $411 for a single person; $632 for a couple. At that rate, it assumes you have housing sorted. Should Super be changed to allow for more people in retirement still paying for housing, or is covering our housing cost up to us? Māori and Pasifika have fared the worst – today only 35% of Māori and 20% of Pasifika own their own homes.
Having a big mortgage is not a bad thing in this world if one can afford it ...ie incomes can manage its costs ...its forced savings while building a long term asset with great leverage ...it has win win everywhere . I remember when my son was looking for his first home I advised him to go all out ie extend his budget as much as Bank allowed ...still he got $ 1.4 million mortgage out of his $ 2 million limit ...but at 30 and as his first home ...its still great ...got refixed recently but not that big a change like yours +40% ...he has investments and mortgage too ...mortgage helps with leverage best and leads to prosperity faster then simple investments
But I reckon having mortgage when your working life is diminishing fast should be worry ...boils more to bad planning. then anything else
This only goes as far as 2017 but shows average houses prices over time an then adjusts for inflation. Quite interesting.
https://www.interest.co.nz/property/...othing-special
Am I reading it right. It looks like house prices really took off not long after 2000 had a breather around 2008 and took off again?
Interesting to see the comments from Rawz and Alokdhir cheerleaders for rate cuts, helps to understand why they see cuts as the best way forward.
Fortunately, the economics geniuses have figured out austerity doesn't work and the way to fix a debt problem is with more debt. Daytr's link confirms this with house prices increasing exponentially every time interest rates are cut and money is printed. Hard to argue that cheap debt and large loans is not the way to wealth when confronted with the facts.
Aaron, do you believe the economy is strong and small business is not struggling?
No I don't.
Do I think inflating house prices and assets and creating a "wealth effect" will make things better? Yes for some people but not for those without assets where inflation just makes life harder instead of better.
Perhaps interest rates are a little high, I guess you would need to check the CPI data and maybe allow for a lag to decide if rate cuts are necessary.
Do you think your wealth should come from central bank largesse?
All im saying, and this is what forums are for... is i am seeing a weak economy. It started earlier this year when i attended the Central Districts fieldays, it was tragic. When i talk to banks and finance companies about their new lending at lows.. when i talk to companies about their capex plans being zero.. I dont need to wait for the lag data to make my call on rates.
Its not just so i have lower monthly payments on my mortgage lol come on. Get out and talk to people and ask how they are going. Dont wait for some data to be released
Fair enough times are tough and lower interest rates will help some people and stimulate some activity. As far as waiting for the data, I don't recall anyone screaming for a rate rise until the data came out after covid. Although easy times are always better than tough times.
You didn't answer my question though.
Yes you are reading it right. I remember sitting in Australia in the late 1990s early 2000s thinking how cheap NZ property was comparatively.
Some waterfront property was priced higher in 2007 than they would get now or thereabouts.
Then obviously the GFC struck.
I'm not sure when negative gearing was introduced, but I wouldn't surprise me if this coincided with the last 20 year explosion in prices, that and unsustainable levels of immigration.
Interest rates aren’t particularly high, especially in historical context - but anyone who bought property with a mortgage during the last 15 years has done so at ridiculously high debt-to-income levels. It’s no surprise that the countries feeling the pain the most from high interest rates are the same countries that let their housing markets run away to ridiculous levels (NZ/AUS/Canada etc). It’s extremely predictable that mortgage holders with heavy debt to income loads would heavily curtail discretionary spending when interest rates rose.
Whereas look at the USA which had comparatively lower house price insanity, and its economy is ticking along fine with current higher interest rates.
Property needs to drop another by 50 per cent around the country. Apart from the last 20 years, real estate has always been a sub par investment. In the 20th century, it barely kept up with inflation.
Houses need to be seen as consumption again, not an investment.
We need higher rates for longer. The piper, as always, has to be paid.
Edit: I don't know what that last sentence means in the context of my comment but it feels right.
Markets are hitting all time high after the UK election. Pound is in bullish mood too. There's always a bull market somewhere.
https://www.reuters.com/world/uk/pou...on-2024-07-04/
Look at Government debt around the world.
It has exploded particularly in the US in the last 20 years. NZ comparative to our OECD peers isn't too bad.
There is a reason why Japan has had ultra low interest rates for decades, their Government can't afford otherwise, the US are heading the same way.
Highly unlikely unless there's a market crash. One is due but cannot predict when it will happen. History will repeat in a different manner.
Remember The 2008 crash and Black Monday 1987?
https://www.history.com/news/2008-fi...-crisis-causes
https://www.reuters.com/world/uk/pou...on-2024-07-04/
British assets gain, mid-cap stocks lead after Labour election win
https://www.ft.com/content/d77efd31-...c-0c0eda59bb2a
Frontier emerging markets stocks soar as investors cheer reforms
Datyr re CGT.Are you saying that countries with CGT havent experienced a rapid rise in residential house prices ?.
Not as rapid as NZ I would suggest.
A CGT is just one factor of course, rampant unsustainable immigration is probably a bigger factor.
At least with a CGT perhaps more infrastructure could be funded to support the building of more houses. Anyhoo, enough of the politics.
Ireland and Spanish property bubbles.. how many similarities are there with NZ?
I don’t know about Spain but there are lots of differences from Ireland. Ireland had multinationals basing themselves there and fast GDP growth. It had joined the Euro and the European Central Bank had lower interest rates than Ireland would otherwise have had. So low interest rates were leveraged on top of rapidly burgeoning GDP growth and incomes. German Banks had also lent large amounts of money to the Celtic Tiger. Irish property was well-inflated.
"The Future Fund likens the current era to the 1930s. Where is the best place to hide?"
https://www.livewiremarkets.com/wire...THE%20INSIGHTS
"Buying Index Puts are value destroying"
That's interesting thanks for sharing.
Yeah buying Puts, the time decay can kill you.
As the article mentions, equities actually do well during wars it might be better to buy Calls.
If things go to he'll in a hand basket, typically everything gets sold, as margin calls hit players cash reserves, and the dollar rises.
In 2008, gold lost around 30% and then went on to triple.
There are certainly parallels to the 1930s for sure which is scary and it's scary that we have people in NZ that are supporting those extreme right wing nut jobs.
No worries …things going to be good soon ..if not very good.
Luxon said the other day -
“I am expecting interest rates to very quickly be lowered as a result and get the economy moving and get employment growing as well,"
Dropping interest rates is good as well as bad. Good for borrowers and homeowners. Bad thing is it could lead to next bubble as assets prices are historically high. I like safe heavens in stocks and commodities now. Completely out from hot stocks of today. There are so many crises like retirement crisis, debt crisis and geopolitical issues have not resolved completely. Anyway, hitting all time high again and again means we could see all time low next as the cycle repeats.
Sahm Rule about to be triggered in US
Interesting, had never heard of this before. Will keep an eye on it thanks.. given it's 0.43 is there a number where it's actually triggered? Is it above 1? Interesting it's slowly increasing and not sharply increasing like prior to previous crashes/recessions
https://fred.stlouisfed.org/series/SAHMREALTIME
• Last week we changed our OCR forecast and now expect the RBNZ will start cutting the OCR from November this year, by 25bp • In recent weeks our commentary had started to flag that the risks were tilting to an earlier cut than our February 2025 forecast • And last week the weights tipped more heavily to the earlier start A decisive development for us was the NZIER’s Quarterly Survey of Business Opinion. It is pointing to increasing risk of the economy tipping back into recession. The activity indicators softened, with reported trading activity for Q2 slipping deeper into contractionary territory and expectations for the following quarter negative. Notably, employment and investment intentions dropped back to levels similar to late 2022, when GDP contracted at its greatest pace in the current slowdown. And the current level for investment intentions is also not that much above 2008 Global Financial Crisis and 2020 pandemic lows. These measures increasingly show that businesses are responding to the pressures they are coming under from weak household demand as well as the varying cost and debt-servicing pressures they have been grappling with.
Now hopefully RBNZ wont mess it up by delaying the positive signal to market and businesses !!!
NZIER Shadow Board views shown below
Economists seem to be saying that OCR will probably be lower in a years time …but could still be quite high.
Hope Adrian doesn’t mess it up by taking heed of these gurus and going too early. Might even a pnother increase to sort things out once and for all
Image curtesy of my mate Michael
I am sure u like all Gurus understand rates work with lag thats why took long to work and will take long to do otherwise too ...if he delays or does what u suggesting then all will go downhill faster then we all can imagine ...Nov is right at present to actually pivot and July meeting is best to start sounding markets about his intentions ...but how it will happen only God knows ...U sure are in throw the baby with water camp ...who wants one more hike ...lol
C(down lots)+I(down)+G(down)+(X-M)= rate cut
Kelly at Westpac and reckons hawkish update from RBNZ this week
Don’t think Orr will giveaway anything, it’ll be usual hawkish tone until they get inflation within target range.
Thats how one gets hard landings ...but its better for Governors to err on side of caution then prudence ...Did he start raising rates when green shoots of inflation were all over ...no he waited and let the genie out fully before even thought of doing anything ...similarly he will surely wait till unemployment has reached 5% plus and he gets his surety that enough pain caused to kill inflation as well as many businesses ....but its always be sure then not ...as he is not trying to win any elections but trying to leave a legacy :cool:
I expected rate cut by the end of this year. Now I reasonably expect it to happen in 2025.One of my mortgages is expiring in September 2024. I have a plan B for it now. I thought why not I find investment which are going to benefit from high rates. Accordingly, I parked my money in cash rich companies.
https://www.forbes.com/advisor/au/pe...ate-australia/
June 27: August Rate Rise 'On the Cards'
High interest rates are good for certain types of businesses. Companies with large cash investments and with positive cash flow will benefit. Their return on investment will increase. Companies with high debt will have a tough time. Naturally, their cost of doing business will go up. Even during high interest environment there are opportunities in the stock market.
RetailWatch report June sales in NZ were 8% down on June last year
Of note -
Department stores down 21%
Clothing/Footwear down 16%
Furniture/Appliances/Homeware down 12%
Online and Instore down about the same ...but Online Domestic down more than Online Offshore
Dear W69
Did you identify companies which can perform well while reducing debt load in their books? It's always good to buy when they are out of favour. Currently, I have kept few stocks on my radar. Also it's good to find out next hot commodities and take positions before others come as droves. IMO coming sell-0ff in assets will get opportunities for intelligent investors. For my portfolio Interst rates is irrelevant. High Interst rates is very good for my portfolio. Thanks.
Out and about yesterday and there’s sales everywhere, retail in every store I followed the wife into and new cars with big discounts in brands not known for big doscounts. Typically after dropping 6 figure on a new one in May haha but even then they were doing reasonable deals. I think the economy stats will go a lot further south yet
The best car deals are the third third third at zero percent interest. Match the cashflow with depreciation expense, GST back etc. I negotiate that every time. If they don't do that then no deal.
Economy. The hurt is real, that's for sure. But I'm not going to have sympathy for cars salesman doing it tough. They have had a very good run through the last economic cycle.
Are Aussies pretty thick or just down in the dumps.
From latest Consumer Confidence Survey - Rate rise expectations post big jump – 60% now expect higher rates.your
Even if they take decision to cut rates it will be marginal and gradual. At least it may take 3 to 5 years to drop below 4%. Don't expect massive cut.
There will be winners and losers if NZD and AUD appreciate sharply. Large commodity exporters can get hit. Earnings from the tourism sector too will drop.
https://www.forex.com/ie/news-and-an...sts-2024-high/
AUD/USD Key Points
- AUD/USD is benefitting from speculation about another interest rate hike from the RBA after a higher-than-expected CPI report and strong retail sales figure.
- With little on the Australian economic calendar this week, AUD/USD traders’ focus will be on US developments.
- For AUD/USD bulls, the ideal setup would be a controlled dip back to previous-resistance-turned-support near 0.6700 to allow a secondary entry on a retest of the breakout level
j powell says he's aware of downside risks. first hint of maybe cut coming soon.
november might be in play for first rate cut. my take on RBNZ
Now there is head room for the Nzd to crap itself so the hard working exporters (the country earners) can clean up.
Everyone has their turn in the sun.
NZ10Y down 10 bps after hearing RBNZ ...market also thinks RBNZ preparing it for cuts in near future ...NZX shud become buoyant now for some years ahead
Brad Olsen sums it up nicely -
Change in tone, or more a complete flip flop from last time’s “the Committee discussed the possibility of increasing the OCR”.
Yeah but who do you believe? RBNZ in May? RBNZ in July? Can’t wait to see what might come out in August (a 50bp hike expectation would be consistent with how much they dart around!). It’d be useful if they could explicitly say “we shifted from a possible hike because XYZ”
(To be clear, I’m being silly with the 50bp hike expectation - but jeez is it hard to know what RBNZ MPC you get on any given day)
Queue 'Shaza' for her insights.
Seems lots of ‘risk’ …makes you wonder whether the RBNZ really understands the difference between a ‘risk’ and an ‘issue’. This from theirvreview -
The Committee discussed the balance of risks to the inflation outlook. Members noted a risk that domestically driven inflation could be more persistent in the near term. However, there is also a risk that price setting behaviour and inflation expectations could normalise more rapidly as headline inflation declines.
Members discussed risks to the economic outlook stemming from Government policy. They discussed the challenge of delivering fiscal consolidation. In addition, some members noted that Government regulatory reforms may affect pricing behaviour in several sectors and the productive capacity of the economy. The net impact of these policies remains uncertain.
The RBNZ left the OCR at 5.50% but acknowledged evolving risks. Next week's CPI data will be a crucial input into the question of when OCR cuts come. t.ly/oaAzA
https://eu.watermarker.singletrack.i...Headers%3Dhost
Big headline in RBNZ …..brave call ..but sucked everybody in and made them happy
OCR 5.50% - Inflation Approaching Target Range
The RBNZ kept the OCR unchanged at 5.5%, as was universally expected • There were plenty of early signs that the RBNZ is starting to eye up data for when it should cut the OCR • We are confident the RBNZ will cut in 2024, in November by 25bp at the least if not earlier or bigger
Looks like Mr Bond lives a pretty normal life to me...
Attachment 15182
Seems like Orr hasn't learned his lesson about saying too much.
Will banks now start reducing their mortgage rates further ahead of what Orr has indicated?
Doing some browsing on seek australia (looking at my options) and there are some roles where they manage things on behalf of NZ companies even from Australia (finance, payroll, accounting, IT etc). So to a small extent NZ jobs are actually being shifted over there.
Your payroll may be done by someone in sydney.
https://www.1news.co.nz/2024/07/10/r...55-once-again/
"In the March quarter of 2024, non-tradeable inflation was measured at 5.8%, and 5.9% in the quarter of December 2023, and was at 6.3% in the quarter prior.
This more stubborn inflation means the RBNZ will likely not cut the OCR for some time.
ANZ and Westpac both forecast a downward change in the OCR in early 2025, while RBNZ internal tracking predicted it won’t go down until the second half of 2025.
Last week ASB revised its forecast for downward movement in the OCR from February 2025 to November this year."
Regardless of whether the OCR cuts are later this year or early next year, concensus appears to be that rates will be cut as inflation tracks down to the target band of 1-3%.
The equities market being forward looking will start pricing in these cuts to OCR in anticipation. Inflation prone equities that have taken a beating will bottom out and SP's will start their recovery, some already have.
The point for a retail investor, is to stay ahead of the curve in revaluations. Monitor your favourite equities market price performance and don't let the recession go to waste, get in or get some more while they're massively discounted, and enjoy the capital gains upside to come.
Hi Value G , the RBNZ is not mandated to keep “ Non tradeable” inflation in the band .
So if we get a low CPI print next week , by the time they update the Aug MPS numbers a cut in Nov can be on the cards . The wholesale interest rate market certainly took things considerable lower post the OCR update today .
RB headline yesterday - Inflation Approaching Target Range
Adrian must have heads up from Stats NZ
Stats NZ headline next week CPI falls to 3.5%
And don’t overlook what Baa_Baa said -
The point for a retail investor, is to stay ahead of the curve in revaluations. Monitor your favourite equities market price performance and don't let the recession go to waste, get in or get some more while they're massively discounted, and enjoy the capital gains upside to come.
[QUOTE=winner69;1060292]Hey alokdhir mate …never called you a ramper …..just admire your optimism[/QUOTE
"Hey alokdhir ….you worry me when you go on a ramping spree like this morning
Makes me ask myself ‘what’s up, why is alokdhir doing this’
Minding you I’m ramping thl eh so can’t talk "
Dated 6/05/2024 ...MFT thread ....just for record ...as I know u mean well always ...:D
what NZX stocks are sensitive to inflation, and should increase in price when interest rates are reduced?
From ChatGPT:
NZX stocks that tend to be sensitive to inflation and may increase in price when interest rates are reduced include companies in sectors such as real estate, utilities, and technology.
- Real Estate: Companies like Precinct Properties (PCT), Stride Property Group (SPG), Goodman Property Trust (GMT), Vital Healthcare Property Trust (VHP), and Argosy Property (ARG) are in the real estate sector. These companies often perform well in lower interest rate environments as borrowing costs decrease, making real estate investments more attractive.
- Utilities: Genesis Energy (GNE) is a notable stock in this sector. Utility companies can benefit from lower interest rates due to reduced financing costs for their capital-intensive operations.
- Technology: Companies such as Rakon (RAK), ikeGPS Group (IKE), Vista Group International (VGL), and Serko (SKO) are in the technology sector. These firms can benefit from lower interest rates as cheaper borrowing costs can spur investment and growth in technology.
- Transport and Infrastructure: Infratil (IFT) and Mainfreight (MFT) are infrastructure-focused companies that can also benefit from lower interest rates. Infratil, in particular, has been highlighted as a "stock to watch" due to its diverse investments in essential services.
These sectors are generally more sensitive to interest rate changes because their capital expenditure and operational costs are heavily influenced by borrowing costs. Lower interest rates make financing more affordable, potentially leading to increased profitability and higher stock prices (StockTalk) (Sharesight) (Simply Wall St) (RNZ).
---------------
would people agree with this?
Record numbers leaving New Zealand, with more departing in May than arriving - StatsNZ
https://www.rnz.co.nz/news/business/...riving-statsnz