Kiwibank have dropped their interest rates - a clear indication that smiling and waving and voting yourself some more housing money has not been good enough to keep the recovery on track in NZ.
Kiwibank have dropped their interest rates - a clear indication that smiling and waving and voting yourself some more housing money has not been good enough to keep the recovery on track in NZ.
This entry was posted on Friday, July 2nd, 2010 at 6:00 am and is filed under economy, perks. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
A great economic analysis Trevor.
Keep up the hard work.
Any way smiling and waving sure beats 9 years of sneering and scowling
It could be worse than that
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7862380/Warning-signals-of-a-double-dip-recession-flash-brightly-across-the-world.html
The Right Ideologues with their failed policies of the past are sending us into another depression.
or
“governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending”
http://www.nytimes.com/2010/06/28/opinion/28krugman.html?_r=1&src=me&ref=general
Douglas started it, Richardson continued it, Cullen tinkered with it, English increasing it.
What is it going to take for people in this country to realise that we are been lead down the economic garden path for the benefit of the wealthy for 30 years; A Depression?
Fortunately Cunliffe is talking about changes in favour of all citizens, Although I’d like to see him be more radical.
What recovery ! All ocean freight rates to NZ from North and SE Asia are set to increase by USD 750.00 per 20′Container (USD 1500.00 per 40′ container) . The first increase occurs on the 15th of July, then two more will take effect over the next 3 months.
By the end of 2010 a 20′ container from Shanghai will have increased in cost by 56%..
Where does a very large % of our imported goods originate…
So add this into the mix of the ETS, GST increases, ACC increases and of course ever increasing local body rates…
2011 should be a barrel of laughs for all…
@Peter
I’d be more worried that our exporters are going to be hit by the same increase. A decrease in the consumption of imported goods we can do with, but stop selling our exported goods and we are stuffed.
Peter here’s a solution: buy NZ made!
Mark m re “Any way smiling and waving sure beats 9 years of sneering and scowling” – well said!
In terms of the interest rates cut – perhaps it is more a reflection that the economy is returning to normal after the fixed rates especially, started to increased dramatically at the end of 2006….you know when Labour was in government and the cost of everything spiraled out of control….
Ever since this time the fixed rates have always been far less attractive than the floating – my guess this is a strategic move on the part of the banks to secure more fixed rates loans.
Dropping the 2 year rates is a fantastic step – hopefully it will extend to the 5 year.
I can’t buy New Zealand made Fridge freezers anymore because F & P packed up and mover due to our unstable currency
http://www.nbr.co.nz/article/fisher-paykel-a-victim-says-economic-lobby-group-pec-55679
Dam OCR, Dam Reserve Bank Act, Dam Monetarist Policy!
Dam lack of of political vision to change that.
Rebecca, you surprise me. Lower interest rates are going to ignite a housing boom, making houses even more unaffordable, an issue constantly close to your heart. OR does that line of your discontent waiver when interest rates go lower, because you are in a huse, and lower interest rates help you? No longer worried for those who cannot afford a first home?
Richard Shaw – first post – well said.
To spin this interest rate drop as s good economic indicator is ridiculous.
This drop show’s a significant lack of confidence in the economy; remember the OCR went up, Banks have cut their margin to entice people to borrow.
People will not borrow because they are worried about the GST increase, ETS increase and no sign of pay increases.
Bill English has borrowed to pay for tax cuts, that two billion dollar hole will grow if the world slides back into recession or Depression.
Cullen sneered and scowled away 10 billion odd dollars in debt repayment. This was one factor that saved NZ bacon when the recession hit.
The Chinese stock market took a dip, if it slides the games up..no dairy Boom, no economic growth.
Then Bye bye National and good riddance; you economically driven foolish ideologues.
Stop Making Sense Richard, you are firing javelins into the money-go-round that people love riding.
Someone explain to me how repayment of debt is negative and borrowing 250m r week is good?
PS – I’m off fishing now; hope we have an economy come monday
Hasta luego
Adios amigo!
Tracey – higher interest rates didn’t stop the boom now did they?
No, they didnt and you blame labour for not doing anything, now under National we are having lower interest which will fuel it again, are you angry at them now too?
Well I bet those poor bleeps with mortgages will be grateful for some relief.
Look at the SWAP rate for 3 years Nov 09 5.2%, 6 June 10 4.85% today 4.42%. All SWAP rates have reduced over the week, banks use this data as a basis for mortgage rates. It might be that expectations as to foreign monetary policies are that they wil not tighten as the growing concern that a technical recession buster does not indicate that all is well. And also suberbian NZ is realising that they are exposed and to reduce borrowing. Unfortunately with the crap KLab nad NAt have thrown us it is extremely difficult to manage house, feed and educate a family, let alone having a luxurery of having a holiday with the 4 weeks. (No wonder we want to have the ability to cash in a weeks A/L, anything that keeps the debt collectors away)
Trev stop playing political games and get real, get some policy and start for once to listen to the people, no more magic bus trips.
Well I bet those poor bleeps with mortgages will be grateful for some relief.
Exactly. There’s always a trade off.
“Trev stop playing political games and get real, get some policy and start for once to listen to the people, no more magic bus trips.”
1, He’s not playing political games and he’s doing his job.
2, You wouldn’t have had the chance to make that barb if it weren’t for the good MPs providing the forum.
3, They have policy, they are going to release it when they want to not when you want them to!
4, They have been listening for 18 months, 13 of which included this blog!
5, They can do what they like, if they want to take a bus trip and see the people then they are great for doing so.
Tracey how can I be angry at government that is providing relief for the hardship suffered by so many families – do you want more people forced into mortgage sales because of high interest rates & lining up at the foodbank?
There will hardly be a boom anywhere near like the one we have seen given the baby boomers have yet to sell off all the houses they bought out from under Gen X & Y and the changes to the tax system and more changes that are about to follow…
All those paying exorbitant rents because they can’t afford to enter the property market will welcome any relief re interest rates…..
“how can I be angry at government that is providing relief for the hardship suffered by so many families” ROTFL
!!!!!
Mrs Straw, Meet Mr Mallard. He’ll be clutching at you for the three to five years.
Look at the SWAP rate for 3 years Nov 09 5.2%, 6 June 10 4.85% today 4.42%. All SWAP rates have reduced over the week, banks use this data as a basis for mortgage rates
Hooray! someone that actually understands how a bank works. *High-five’s*
Another driver for these interest rate drops will probably be the RBNZ liquidity policy and Core Funding Ratio.
With longer-term funding coming into the banks, and most housing lending on floating or short-fixed mortgages, banks could end up with a ‘maturity mismatch’. Making longer term rates more attractive will encourage borrowers to fix rates for longer, and also give the banks less need to enter derivative contracts for interest rate swaps.
Ohh Spud so you think families having year after year of high costs including high interest rates has been a good thing? One day you might become a home owner, have children and realise what these costs really mean.
Wait until families feel the hardship relief from GST increases and their next ETS powered petrol tank fill.
Soon after, in the new year, families with children can enjoy the hardship relief from ECE cuts and by then predicted rises in inflation will really be kicking in.
Unless of course said family is on $150K plus a year in which case they will still have a couple hundred dollars a week net in hand from NACT’s tax cuts, shame those tax cuts were weighted to that end of the income spectrum instead of towards lower income families experiencing financial hardship.
Good grief Loota are you sure you are not a Labour plant? How many times have you said this stuff??? I hope for your sake you are on their payroll as well, you sure offer their rhetoric over & over & over & that is a lot of free time & marketing you are giving them!
Did I mention all of the above come complete with community service cuts, Rebecca?
A local Dunedin support organisation has just lost ~$200K worth of DSW and ODHB funding (the large majority of their budget, and its not funding going to another organisation the money is now completely unavailable due to cost cutting). This is likely going to force a shutting of the service’s doors ASAP, leaving 180 mental health and long term unemployed clients in and around Dunedin in limbo, some of them will not find support and accomodation elsewhere.
And you mentioned something about families experiencing hardship?
Also can someone explain nicely how
“Outgoing chief executive at the state-owned bank Sam Knowles said the rate cut was to provide longer-term certainty to customers who were concerned about interest rate volatility.”
is a
“a clear indication that smiling and waving and voting yourself some more housing money has not been good enough to keep the recovery on track in NZ.”
Rebecca, truly, you dont see a danger that low interest rates will refuel property investment and deprive first home owners again? I have to say I will fight for your right to claim you want to vote labour but just can’t, but after your posts of the last two days in threads I have visited you will never convince me that is really true. Most here, except maybe spud
accept mistakes made by labour and other deficiencies, you seem loathe to accept national are doing anything that even borders on a mistake.
“but just cant” shouldn’t be in the above post.
Tracey I will never vote for Labour until I see them recognise their need for change – all the posts on here are the same old rubbish that saw them lose support in 2005 & never regain it.
The need to accept responsibility and accept the need for change – hasn’t happened in 18 months and quite frankly, can’t see it ever happening.
I am all for a government that does things differently to what we have seen in the last decade & so far, we are definitely getting that.
Not sure if I like all the changes and some I definitely disagree with but this is a Labour blog site so I am here to hold Labour accountable. Labour is the party that is out on its ear so it is Labour that has to prove it is a credible alternative government – the Nats already did this as they are the ones in power.
Whether people believe they are in fact as credible as what they claimed prior to 2008 well, they get their proof on election day.
So let’s be real about this: first home owners have already been deprived and have hardly started screaming into the property market – not with high interest rates, higher demands in terms of deposits etc, still very high house prices & loss in incomes/jobs etc all on top of massive hikes in basic cost of living.
Lower interest rates makes houses for these people more affordable.
Re the property investors – it’s not like they have all sold their houses? They still own them & still charge people exorbitant rents!
Further, this reduction is only affecting the 1 or 2 year rates – hardly a massive drop for the planners who prefer the 5 year term (like me).
Banks are clearly trying to move the focus from the much cheaper floating rates that we saw in 2007 & onwards & get people onto longer terms……how is this going to cause a housing boom and where are all the affordable houses for sale that people can buy?
“Re the property investors – it’s not like they have all sold their houses?” Property investors tend not to sell they tend to buy adn/or hold. Low interest rates will foster that trend. Most first home buyers I speak to are not cut down by the interest rate but the size of the deposit.
I am genuinely interested to see that you dont see any threat to one of your favorite gripes (lack of home affordability for first home buyers)by the investment market with lower rates.
When you said Labour had created the problem of home affordability I hadnt realised what you had meant was they didnt lower interest rates to solve it.
“how is this going to cause a housing boom and where are all the affordable houses for sale that people can buy?”
I thought your gripe was there weren’t affordable houses for first home buyers to buy, and that greedy baby boomers in NZ was buying them all up for investment? I cannot see lower interest changing that, quite the opposite?
I find it interesting that Rebecca is now making the argument for hot cheap easy money in the housing market, the very things which helped fuel the property speculation bubble and pushed prices out of reach of many.
The NACTs and their allies capitalised on a mood of discontent in the nation: quite different to being a credible alternative.
I will be disappointed if Labour tries and mimics the policies and style of 1999-2008 but I doubt it will be so as everything I have seen on this blog from Labour MPs suggests that attitudes and ideas are progressing on from there at a rapid clip.
Loota Re ” everything I have seen on this blog from Labour MPs suggests that attitudes and ideas are progressing on from there at a rapid clip.” Really? How?
Loota/Tracey – since you clearly have all the answers then please provide full clarification to my query at 1.49pm
Explain HOW
“Outgoing chief executive at the state-owned bank Sam Knowles said the rate cut was to provide longer-term certainty to customers who were concerned about interest rate volatility.”
translates into being
“a clear indication that smiling and waving and voting yourself some more housing money has not been good enough to keep the recovery on track in NZ.”
I didnt write the comment about smile and wave. What I have written is my opinion based on experience, that lower interest rates will fuel property prices and not make them anymore affordable for first home buyers.
I do see what you are saying but disagree. I think National got in because they are not Labour. You seem to be sayng even if they do some of the same stupid things labour did, that satisfies you. I say, I want to hold National to their campaign promises, transparency, accountability and change.
I would be interested to see if in this past 18 months urgency has been used less, the same or more, than average terms of 18 months duration. This use of urgency puts paid to some of the argument that change cannot happen overnight.
Tracey – they are doing some of the same stupid things that Labour did but are also doing many things that are different that many people do actually like….e.g. tax & welfare reform, victim compensation, crushing cars, putting more onus on gangs (assets etc), ‘p’ raids (massive customs focus), cutting ECE from 100% to 80% (which I am in complete support of), doing the first comprehensive review of child abuse in a very very long time etc
Yes still want to know how Sam Knowles statement correlates with TM’s – call me stupid but I can’t see it.
Crushing cars ? Tell me how many ??
“tax & welfare reform, victim compensation, crushing cars, putting more onus on gangs (assets etc), ‘p’ raids (massive customs focus)” – fair enough…
What do you mean by massive custom focus?
I dont think we need another child abuse review… we need the kind of programmes (and whanau ora may be one) at grass roots dealing with it.
Peter – dunno but at least they can!
Tracey – big ‘p’ hauls via customs (containers with the stuff that makes it etc)…
Just want someone to clarify how Sam Knowles statement correlates with TM’s….
i would like to see any stats on the P hauls, cos was wondering the other day, are they seizing more than usual…
Seems like it but maybe there is just more reports? The government claims it is all due to their getting tough on P approach. Not sure where/how to find the exact stats?
I think we may be entering part two of the big bubble letting out air slowly, the flow of unbelieveably cheap credit lead to some pretty heady times for the last 10 – 15 years but the time has come to pay the piper – both government and personal debt must be reduced and some economic reality and true growth to be re-introduced…
Lower government spending and lower consumption must result – bad for our economies but good for the environment hopefully…
For Trevor to say any of that is the fault of the current government is incorrect IMO…
I don’t think T.M.’s post says that – it appears he is saying that the economy must remain fundamentally weak if downwards pressure on interest rates remains.
I really do not think that NZ should be borrowing cash at the rate that it is – exactly your point JMH – living beyond our means as individuals or as a country is simply going to be bad news. Short term lifestyle gains no doubt, until the repo man and the baliff knock on the front door.
Good point JMH.
I tell what is sure to prolong the recession – ACC levies!
Car regos went up by $30 yesterday & non-petrol went up by at least $125…….if you happen to drive a ute, your rego is now 583.81 instead of the $400 it was last year.
And then there is the trucks – once again have been hit in the gut. Most have gone up by $200 per year….for some companies (e.g. NZ van lines) this means an increase of $20,000 per year! Good grief!
Why is it no government is capable of looking after us? How hard is it to make sure that every New Zealander is safe, adequately fed, clothed & housed?
Interest rates lowering will be very welcome for many families who are on the brink of mortgage sales…..sales which thanks to everything always going up for the past 10 years, are becoming more and more frequent.
You want back in Labour then do something.
NZ needs high value added, advanced industrial and service sectors which are able to sell to the world and bring hard foreign currency to our shores. This is the only way that we will be able to afford the services, the benefits and the relatively low taxes NZ’ers all deserve.
The argument can go around in circles but it boils down to having enough money to spend on your people and communities. If you don’t have enough money then you have to keep cutting services, borrowing, and holding tax rates up higher than you would really like.
So do you think Labour can do this? What kind of industrial & service sectors are we talking about?
TM will no doubt tell us off as we are off thread…but this does come back to the rates the banks charge us.
Money dictates everything and we need more of it, especially if we want to continue providing the level of benefits that Labour so clearly advocates.
So the question is, how will Labour get us more money? How will they ensure we move out of the recession while keeping mortgage rates at levels that are affordable for all New Zealanders and allowing us to keep more money in our pocket (less tax) so that we can keep up with the ever increasing cost of living?
“Someone explain to me how repayment of debt is negative and borrowing 250m r week is good?”
Are you saying Labour wouldn’t be borrowing any money if in Government right now?
I like the economic analysis here. I suppose most of you think it is a good idea to borrow 2 billion to invest in the super fund each year?
Classic.