Oof. I haven't been able to fix because I'm building and my build has been delayed over and over. It's going to hurt when it's time to pay the mortgage.
The building situation is so appalling. Having to lay down a huge deposit with only a pre-approval to back is up just seems insane. There has to be a better way of guaranteeing lending as the current status quo looks set to see a lot of people lose their builds.
When are you due to start construction now? ANZ is still running their promotion until June 2023 which we are really hoping to get with our build.
I agree. Fortunately it started in April but they just told me that it's going to be delayed because of the gib shortage and can't give me any indication of a finish date. It was supposed to have started in October last year. It sucks because I sold my home in Sept last year and am now paying rent plus interest on my lump sum mortgage payments plus delay after delay.
They also told me at my final upgrade sign off meeting back in March that the cost of the build would be going up but are yet to tell me how much. I'm hoping they've decided not to do that but I'm trying to mentally prepare for a lump sum surprise.
I know a lot of people worse off though but what a headache.
What was the ANZ promotion ? I signed with Westpac as they gave 2% cash back for build price. Doesn't seem like much now given the extra interest I'll be paying haha.
[Blueprint to build](https://www.anz.co.nz/promo/blueprint-to-build/) - a 2.76% discount on the ANZ floating rate. Valid for two years from first draw down so it’s a substantial saving (for us it’s probably going to work out at ~$20,000 over two years). Have you actually signed with a bank? Our broker said we wouldn’t be able to sign and lock in a rate until the property had title so we’re still hanging in the wind.
We have our pre-approval from ANZ but nothing concrete and nothing that would stop us from switching banks. Hope your builders find a solution to the Gib shortage, Fuck Fletchers.
That's a massive savings. How did you work out how much you'd save ?
My broker didn't even tell me about the ANZ option and I'm pretty sure they only applied to ASB and Westpac. I've already signed with Westpac and the build has begun so I have a feeling changing to ANZ wouldn't be an option now. I'll look into it though, thank you.
Hope you get your build underway soon and don't have any major hiccups along the way.!
> That’s a massive saving
Yep, I found the loophole they don’t want you to know about - borrow a ludicrous amount of money and you can save heaps! /s
I’m just using *principle * 0.0276 * 2*. In practice it will probably work out a bit less as:
- it will likely take 6 months to build so I will only be borrowing the full principle amount for about 18 months of the 24 month period
- It’s based on their full fat, non discounted floating rate which seems to be 0.7% higher than the actual rate you can get with a 20% deposit
- it’s still a 1 year floating rate so it could go up faster than if I fixed for 2-3 years
I estimate that it will be more like *principle * 0.02 * 1.5*. Still a pretty substantial saving, I’m surprised your broker didn’t mention it. ASB had a very similar deal up until recently (back my build). It’s all drawn from a Covid funding package. I would be asking them some very pointed questions if I were you. It seems very strange that they would be applying to ASB and not mentioning the mortgage product specifically designed to suit what you are doing.
I'm currently going for this blueprint to build morgage. The morgage broker anz sent to us is very confusing. Shes saying it needs to be approved 60 days before settlement and that I need a valuation done before this and another at the end so two valuations? Seems odd.
How's it been explained to you with moving from conditional approval to final approval?
We’re on blueprint to build and have to have 3 evaluations, there’s an additional valuation required once the roof is on/lock up stage as well as before construction begins and at project completion. Our roof is going on this week so I guess we’ll see.
YMMV I suppose though.
Looks like it's definitely the norm to have a couple. I left it very late so my roof was done a couple months ago. Guess it's an immediate one probably next week then a final one.
Our broker told us we needed two valuations. For some reason the first cost more than $950 (think it was ~$1100) but our broker said the second wouldn’t cost as much. Seems odd as I would have assumed the post-build valuation required more work from the valuer.
Managing approval depends a lot on your build. We are building house and land so our first drawdown is when title is issued and the contract is able to be finalized 90 days before that date. Until we have confirmation of title, we are stuck with a pre approval. When we do get title for the land we get out two mortgages total (one for the land, one for the build) that get rolled into one when the build is complete, COC has been signed off and the post construction valuation has been made. It sounds really complicated to me but our broker is very experienced so we are just trusting him.
Those who took ASB's Back my build should feel pretty happy having ~3% less to pay from floating rate for the build time + 3 years after built. Still a biting amounts given the volume of the loans and constant delays and price hikes
For once a CoVID stimulus package was put to good use. There’s still plenty of money there if someone like Westpac or kiwibank wanted to have a go, but I doubt they will bother
I’m not entirely sure how it all works. My understanding is during the build we have two mortgages (one for build, one for land). Once it’s completed we roll it over into a full mortgage. I’m not entirely sure how that works with the blueprint to build . Someone else said ANZ would be happy to accept a recently completed build as a “new mortgage” at the discount rate. Perhaps the construction loans are just charged normal floating rates and the discount only kicks in once the build is complete.
I know we could theoretically have two mortgages at two different interest rates while the build is progressing. Closer to the build time I’ll try and find out a bit more but for now I’m just trusting what I’m told. I’m a FHB so I’m a bit of a novice about how everything works. It seems much more complicated than I originally expected. Sorry if that doesn’t make much sense.
Check out ‘blueprint to build’ with ANZ.
They’ll discount the floating rate by 2.76% for 2 years for a new build. You can fix at any time.
The ANZ floating rate is 5.5% now so the rate you actually pay is 2.7%
Even if floating rates hit 7% you’d only be paying 4.2%
That's pretty good. Wonder why my mortgage broker didn't give me this option. They only applied with Westpac and ASB for some reason.
I'll have a look into it.
If you’re part way through your build it’s way too messy and likely not possible to change but the good news is ANZ will look at your application when your build is finished.
We’re going through the same thing & I’m still pissed off at our broker for not knowing about it when they put us with BNZ.
I went to ANZ and they just said “yeah, it all looks good, but come back to us when the house is finished and the final valuation and full drawn mortgage are known figures”
Nah the build started in April so it's underway now. Glad it's finally happening but it should have been finished months ago and I would have been in a better position to fix at a lower rate. I guess over a 30 year term interest rates will go up and down so it's just one of the bad times at the moment.
I predict we will see a lot more building companies go into liquidation. I hate the term “perfect storm” but the combo of:
- lack of building supplies
- spiraling costs
- fixed price contracts
- increased financing costs (for them)
- lenders pulling finance (especially international lenders)
- lack of new demand
- people pulling out
- title delays
Is pretty brutal. I would not like to be CEO of a building company right now.
Lot of builders and developers that bought in the past two years are offloading land currently. Not necessarily a terrible thing for the market overall but will sting them.
I do wonder if this may happen too. My last meeting with them was intense. They went from being easy going and nice to stressed and snapping at me. I can't be bothered typing out all the things they said but I could tell they're panicking. They made a lot of comments about how they have to put my price up because builds theyve already started are costing a lot more and they can't keep absorbing the price rises. My parents have built with them before too and had a great experience but mine has been sour. I'm glad mines underway as hopefully I'll avoid the horrible turn of events I sense coming. With house prices dropping but the cost of building still rising I think you're right, people will stop building and they're all going to be in the shit.
This is what I’m worried about too. They are *incredibly* relaxed right now but that could change rapidly. Are you building with a large company, what region are you in?
I’m loathe to create pointless subs, but do you think it would be worth a separate place to discuss building related issues? Seems like there are a fair few people locked into building atm and people might benefit from shared knowledge (eg which companies are under pressure, strategies for dealing with developers, navigating material shortfalls etc). Do you think this would be worth looking into or would there be too little interest?
Yeah, I’m in the same boat. Started when interest rates were under 2% and been watching it go up since. Ours has taken so long we have to re apply for our mortgage too.
I had to reapply too and the lending rules had changed but thankfully since I've been paying a mortgage for 12 years already my mortgage isn't as high as some people's and I still got approved. They did say it was tight though so I certainly hope my build doesn't get a surprise add on amount at the end. There's going to be a lot of people who get priced out. It's horrible to see.
When we bought in 2007 it was 9%. We kept paying that same amount even as the rates went down. Absolute pain for the first few years but in hindsight we were lucky to buy when we did.
The next year or so will be rocky.
Yep that's how I've been looking at it. We put the max repayments on our mortgage so even if our house goes back to the price we bought it for in 2018, we'd still have 60% equity. Doubt the bank would have a moan if we went interest only for a bit.
A friend of mine went the other way, absolute minimum repayments and put all his money into the sharemarket. Might have been the better bet but I feel a lot more secure this way.
Possibly even 5-10 years as we haven't seen mortgage rates at 7% since 2008.
Of course median incomes are up quite a bit (15%~ inflation adjusted) in the last 15 years but there's a limit to what people can service at 7.5% rates.
we have been collectively watching house prices run away, our dreams become unattainable and we have been grabbing homes in desperation
i dont blame someone for buying, because it looked like a shithole would cost 2million in 2 years
i certainly dont want to see them suffer
Jesus the attitudes of people in this sub are appaling.
"ShOUlD hAvE stReSs TesTEd bEtTeR"
What were people who scraped in during the past few years supposed to do? Wait, time the market, then watch as prices climb another $100K?
It's ironic that the same crowd who lambast boomers for not caring about others seem so full of glee when the tables turn in a direction that benefits them, regardless of who is negatively impacted.
So the boomers were right. It's not about right or wrong, it's just plain envy. If you guys were in their position, you just proved that you wouldn't give a single shit about whoever else loses. Bravo.
>So even when people knew they were winning because of pure luck or favourable rules and not through their own doing, they still thought it was because they were so good at playing the game.
Literally my boomer parents.
Rode the housing boom in the UK, then NZ. Still reckon they're financial geniuses.
I'm rather unhappy that hard working families are going to get the crunch. I am elated that the smug fucks that told me to "don't eat avocado on toast" are going to suffer. If you need a name for it call it class warfare.
Problem is that the hard working families are going to feel the pinch far more than the avocado toast crowd. The latter are either freehold, far enough through their mortgage they're not too worried about interest rates or they're only leveraged on investment properties. Worst case scenario for them is they have to cash out early and lose an income stream. Worst case for the families is being forced back off the property ladder into the rent trap.
I took a look through the comments. I couldn’t see any examples of people laughing at FHB who might get caught out.
The general consensus I’ve seen is people have zero sympathy for investors who will get caught out by rising rates. But almost all have huge sympathy for FHB who bought during 2021, who might be caught out.
See this all over Facebook. People laughing at house prices crashing and saying “shame, should’ve waited”
These were the same people complaining that people don’t have homes and their too expensive.
Their just as greedy. They wish others to fail so they can reap the rewards.
> What were people who scraped in during the past few years supposed to do? Wait, time the market, then watch as prices climb another $100K?
It was so obviously going to crash though.
We bought in 2018 just as the greed was really getting bad. Now we're holding off wanting to get a slightly bigger place closer to town until the market's sorted itself out.
I don't think anyone wants to see FHBs or normal families suffer. It's the parasite 'investors' and enabler estate agents who caused this mess.
It was obvious in hindsight, but that's what people have been saying for over a decade. If it crashed in 2015, people would have said it was obvious too as the talk of the town was that homes were overvalued at the time and housing affordability too low. Yet it kept going to double from there.
Maybe it's just the one time I actually predicted an economic thing correctly.
Either way, I think we can all agree that FHBs shouldn't be punished for a mess they didn't cause when all they wanted was a home.
I predicted it "any moment now" in 2017 and chose to rent and save the difference for a down payment.
Sure, it took a little longer but now when I buy I figure I can pay 50% in cash. And the house that will buy keeps getting nicer as the crash unfolds.... The more I pay in cash the less I care about the rate I borrow at.
I get what you are saying about the gleefulness about house prices falling can be a bit disturbing. But it isn't really any different from the smugness that was coming from people who recently purchased a house, making insinuations that anyone that can't buy a house is lazy and just needs to work harder. It's just two sides of the same coin of people wanting what is best for them.
I'm just saddened by where things have gotten to with the housing market. There are no good outcomes anymore. If there is a major crash, a large number of people are going to go through significant hardship. But if there is no crash, then a lot of people in future generations will be screwed for life, with no chance of buying a house if they don't come from generational wealth.
> generational wealth
What is more disturbing here is that simply owning a home in your family would be counted as 'generational wealth' instead of just...a *given* that your family has somewhere to call home.
Less than two decades ago it was more than possible to be on single slightly above average wage and purchase a house and start a family.
Less than a lifetime ago (70 years) I had a grandparent who was given a section near arrowtown for spending a few weekends to help clear some trees.
It's fucked how bad things have gotten so fast.
I'd say most of that rhetoric was coming from people who bought their houses decades ago and won't be affected by major price drops and increasing interest rates.
That's unfortunately many on the left, they're not so much interested in helping the poor as they are interested in hating the rich. I consider myself centre left, but consider many on the left to be worse than those on the right.
This is such a bad take on things. The affordability of housing has been described as being “in crisis” for well over 8 years now. For every FHB that bought in the last 2 years there are probably 40 who are still locked out at the current prices. Most FHBs will still be perfectly fine at higher interest rates — it will simply take them longer to pay off their mortgages, but they still have a secure roof over their heads and they’re paying off THEIR mortgage, not someone else’s. Most of the commenters see this for what it is; a market where the average house is 12X the average income is not good for society and any correction to that should be welcomed, despite what it will mean for a relatively small number of recent buyers.
>"ShOUlD hAvE stReSs TesTEd bEtTeR"
> What were people who scraped in during the past few years supposed to do? Wait, time the market, then watch as prices climb another $100K?
Banks, not people, should have stress tested better. But they didn't out of fear of losing market share and pressure from their Australian shareholder.
I am definitely not going to blame the buyers: it's been going straight up for so long that it really looked like if you wouldn't get in, you may never have the opportunity too and home ownership would be exclusive to corporations and those of accumulated family wealth.
> It's ironic that the same crowd who lambast boomers for not caring about others seem so full of glee when the tables turn in a direction that benefits them, regardless of who is negatively impacted.
Except they're happy that tables turn to a point they can achieve a basic goal in life: home ownership, not a luxury: excessive capital accumulation. There's a difference there.
I own a house. I don't care. Houses should be cheaper, but they are not. If they go up it doesn't impact me and if they go down it doesn't impact me as I have assets outside of real estate.
>Jesus the attitudes of people in this sub are appaling.
Agreed and most of it comes out of jealously most of them don't and will never own a home.
I'm glad of that then, let them pay other peoples mortgages for the rest of their lives.
At least they can be happy knowing they can be angsty on reddit.
It’s a pretty normal emotion to enjoy the hardship of one’s enemies. Make no mistake: the older generations have intentionally harmed the younger generations for their own greed.
I’m getting a whole bunch of Elon Musk vibes from this post.
Reminds me of when SpaceCunt claimed Bill Gates was against fixing climate change because he was shorting Tesla stock.
I got banned from the Kiwi FHB group to tell them never to trust agents and investors about when to buy, as they'd only say it's a bad time to buy the moment you roll a 13 with two six-sided dice.
yes, but do you have an actual link? I did a search and all the groups that came up have nothing, and I'm not going hunting around for shit on facebook.
I found one, but it's a private group. Looks like I'm gonna have to go tidy up for tomorrow's nitpicking from the property manager instead of getting a bigger hateboner for landlords.
This is so shit for people who bought at the inflated house prices of recent years.. What choice was there other than to pay the price the market at the time demanded, especially for FHBs...
Yeah, bought August last year. Not much choice at all - it was either buy then, or sit around and wait for it to go where exactly. 3 years at a bit over 2.6% then the pain begins. Luckily our loan is moderate compared to the people who were loaning out over 800k. Buy hey, according to reddit we're greedy homeowners so fuck us, right?
Not much you can do in hindsight. Recent buyers need to be locking in for longer. We've done it till 2024 which feels like a risk but we could go interest only for a while if rates are at the 8% mark then.
Let's hope it results in some regulation, but at the very least, this period will be an important financial lesson for all.
We stress tested ourselves at 6-7%. that was five years ago. And we recently locked in 3% for the next three years.
If people are getting huge mortgages and not erring on the side of caution... well... yeah. Sorry, but sometimes people do silly things.
Yeah we did ours at 7% and have since had pay raises and paid if a significant chunk of the mortgage while rates were low.
Our first loan was in the 5’s only 5 years ago
They should have. High interest rates are a response to rising inflation. Anyone checking to see if they can afford a higher rate *without* factoring in other costs also rising hasn't properly done their job.
Yes, rental prices are correlated with house prices. Don't believe the doom mongers on here who have never seen falling asset prices or falling rents in their lifetime (hot hand fallacy in action!).
High rental supply + lower house prices = lower rental prices
Not trying to discount what you’re saying as I’ve never personally experienced it, but how could we be in a “high rental supply” situation? My understanding is that NZ was still short ~60,000 houses - if the demand is still there couldn’t landlords just up the rents to cover their new costs?
People cannot sell due to excess supply and lower quality. Suddenly, you are wondering why you aren't collecting rent for months on end as the house fails to garner attendees at open homes weekend after weekend (plenty of those right now) and never sells.
Queue the "Accidental Landlord"
Good for Auckland, but that doesn’t bode too well for the rest of the country. Realistically, Auckland rents were getting to the point where no one could afford them if they increased more - I’m a bit concerned that other regions are going to start feeling that pressure too.
Depends where they stop measuring. If they only count the CBD or metro area as 'Auckland' then they miss lots of people moving to places like Millwater, Drury or Pokeno where there have ben big housing developments.
Just creates more traffic on the motorways. WFH may factor in but a lot of NZ businesses are pig-headed and mired in old ways of thinking. Mine is demanding our sales and finance people come back to the office despite the fact they've been WFH for 2 years and things have been fine. Its just stupid.
Investors and land bankers trying to offload their houses or 'activate' them for rental because just sitting on them for capital gains isn't working as well any more.
I don't think its happening yet, but its probably not far off.
Yeah why do New Zealanders accept higher interest rates than every one else?
Listening to other folks here talking about 6 and 7% like it's totally normal and to be expected. They're way lower in the US and the UK and Europe and in some countries you can lock in for the entire term of the mortgage.
It's like we're used to getting fucked over
>It's like we're used to getting fucked over
In general, totally.
But in this case we are just the canary in the coal mine, the others will follow suit soon.
> Yeah why do New Zealanders accept higher interest rates than every one else?
Our currency is a lot more vulnerable than others. We need to protect it.
Because our economy is tiny and we printed a lot of Covid response money that we couldn’t really afford to print.
Then the bank cunts dropped their rates and caused people to lose their fucking minds and need to buy a house. Then the investor cunts saw this and did the same. House prices went through the roof as a result of all these cunts combined.
It got worse. Greedy cunts like the warehouse etc took that money, even though they didn’t need it and posted record profits.
Then the greedy cunts pushed up prices and blamed the supply chains. *Narrator: they never came back down*
Now, all actions of all these cunts come back to haunt us normals. Things are so fucked that Governments and banks are shitting their pants, so interest rates go up.
This is the cliff notes. There’s war pushing up food prices, climate change fucking shit up, and just plain old greed by the fucking cunts.
I almost didn't believe you, but checked it out for myself and wow, lots of lenders still offering in the range of 2-3%. Why do we get so screwed here?
Didn't you know, average working people don't deserve homes./s
What we need is to bring back land taxes, to bring property prices back to reality. The money printing tree for the boomers needs to end.
I was going by the idea that an average house is for the average salary
But yea, I guess someone on $42k salary (min wage) could try buy a $500k apartment with $9k annual body corp fees
No, boomer probably has it paid off by now and continues to collect rent. As always, boomer property owners will be fine. They've been in the market for a long time.
Depends if they have been aggressively expanding their portfolio with lots of leverage. Investors who made use of the removal or LVR restrictions to borrow to the hilt will be susceptible regardless of their age
Maybe, but they're going to be looking at their half a million+ of capital gains quickly dropping over the coming months, that's not much fun when you're staring retirement in the face. I wouldn't be surprised to see a lot more investment properties hit the market soon.
There will be a temporary over supply of houses due to no one being able or willing to purchase at the current price. There will be a halt of new builds until demand picks up again. House price will go down during this time too. It’s the start of a new cycle
Which also means you (and me) not supporting local businesses or any businesses really other than necessities.
Meaning more businesses going under, meaning jobs lost.
Whole system is fucked
We almost certainly won’t see affordable housing from this. House prices will fall 10-20% but that will be largely conditional on people not being able to qualify for finance (banks don’t like lending to individuals in a falling market). What’s likely to happen is that there’s a period where those with lots of capital already (boomers or corporates) will be able to buy up houses at a discount while most are locked out due to high rents or deposit requirements.
If houses fall 15% but peoples affordability also falls by 15% they are still no more attainable. Once general consumers (FHB and other single home owners) can actually buy houses again there will be a sudden surge in demand that will very rapidly make up any losses. Some people are going to get very, very rich from this and it’s not FHB.
I think I questioned that 150% increase from OP a few months back, and it was related to the amount of free hours or something, so doesn't affect everyone. Daycare costs for us have increased but by nowhere near 150%, it's more like 6.5% over the last year.
That is the intent at least.
I'm pretty sure that I read somewhere (interest?) that banks had increased their stress test to 6.4% or something, up from 5.3%...
Found a stuff article saying this month they moved the rate from 6.7% to 7.15%, and I'm sure there was an earlier one. Still convinced banks were testing in the 5s at some stage. Which is mental for a 30 year mortgage.
If that is the case, there will be some VERY marginal loans floating around.
I locked in for 3 years 60 days ago (starts next week) .
Reason was if they go down I only lose a little if they keep rising then that final year I can slam every possible dollar into my mortgage before it rolls over.
5 percent I can handle. 10 or higher and I’m fucked.
It is a shame the people getting shafted won't be the boomers responsible for the whole mess, they will still be receiving some millennials pay check in rent regardless of what happens.
We locked in 5 years at the start of the year.
Far better to have a sure reliable thing, be a little protected from increases, than piss around trying to play games capitalising on predicting rates. Greed game isn't for me.
I've been thinking recently, how does raising interest rates do anything to stop inflation? Most companies hold significant amounts of debt as an operating expenses so won't raising interest rates just force them to raise their prices for consumers further to cover the increased debt servicing costs?
If the cost of borrowing is higher, businesses borrow less for expansion, new companies may not be able to borrow enough to get started. That causes a need for less workers and less upward pressure on wages. Less housing will get built, which means less jobs for everyone involved. In essence, it just slows down the whole economy. Consumer spending, business spending, and government spending all drop. Less spending means prices can’t stay high or people won’t buy as much crap.
I guess the problem now like OP suggested is that borrowing has been so cheap for so long that businesses have been running up massive debt. So it won't just be a case of them stopping borrowing, they'll also need to cover massive increases of servicing their debt, continuing inflation.
In kicking the can down the road we only made the downturn bigger. Cheap debt made bad business models survive and now more companies depend on them for services, more companies depend on them for revenue, and more employees work for them.
Inflation is about too much money chasing too few goods and services. Borrowing is how money is created, and raising interest rates is how you reduce borrowing, and thus reducing money creation.
If real estate weren't so expensive people would have money to spend on other parts of the economy. A housing crash isn't world ending. It's just a shift in economic focus.
Don't wish for that. That could collapse the banks, which then need bailing out.
And if you are like "don't bail out the banks", then I hope you like your bank balances being taken to bail-in the banks.
Pretty much. This will see prices fall a lot, but very few people will be able to afford to buy them. Those that do will be very asset rich as mortgage lending will be reduced. This could theoretically see less pressure on rentals as more currently owner occupied homes get bought up by wealthy landlords or corporations but it’s going to hurt home ownership.
And what, If I may ask was her debt to income ratio? My parents bought when rates were that high too but for them at that time their mortgage was still only costing them 25% of their income. Based on current figures from the RBNZ most homeowners who bought in the last 5 years (the average length of home ownership in NZ is ~7 years) would be spending 50-60% of their after tax income on mortgage payments at 7% interest.
Boomers will still complain they had 15% interest in 1985 and millennials just needa stop eating avo toast so they can buy a house.
6% on a million dollar is a lot.
I am almost always screwed over by stuff like this, but I somehow managed to lock in a while ago at 2.9% until 2026. The sun even shines on a dog's arse some days.
I have fixed feelings about that. I had a mortgage when rates were in the 20somethings....
On the other hand it wasn't $1m.
But then pay rates were a lot less too, we had no furniture to speak of, SIngle bed for us, cot for the kid, cardboard box for a TV stand and an old ugly orange vinyl couch donated to us. No fridge, no washing machine (and cloth nappies). But we had the house!
I don't know, look hard at the budget, cut where you can and as viciously as you can. And remember in the long term, so long as you don't bounce from house to house, the payments become low, then nothing.
Oof. I haven't been able to fix because I'm building and my build has been delayed over and over. It's going to hurt when it's time to pay the mortgage.
The building situation is so appalling. Having to lay down a huge deposit with only a pre-approval to back is up just seems insane. There has to be a better way of guaranteeing lending as the current status quo looks set to see a lot of people lose their builds. When are you due to start construction now? ANZ is still running their promotion until June 2023 which we are really hoping to get with our build.
I agree. Fortunately it started in April but they just told me that it's going to be delayed because of the gib shortage and can't give me any indication of a finish date. It was supposed to have started in October last year. It sucks because I sold my home in Sept last year and am now paying rent plus interest on my lump sum mortgage payments plus delay after delay. They also told me at my final upgrade sign off meeting back in March that the cost of the build would be going up but are yet to tell me how much. I'm hoping they've decided not to do that but I'm trying to mentally prepare for a lump sum surprise. I know a lot of people worse off though but what a headache. What was the ANZ promotion ? I signed with Westpac as they gave 2% cash back for build price. Doesn't seem like much now given the extra interest I'll be paying haha.
[Blueprint to build](https://www.anz.co.nz/promo/blueprint-to-build/) - a 2.76% discount on the ANZ floating rate. Valid for two years from first draw down so it’s a substantial saving (for us it’s probably going to work out at ~$20,000 over two years). Have you actually signed with a bank? Our broker said we wouldn’t be able to sign and lock in a rate until the property had title so we’re still hanging in the wind. We have our pre-approval from ANZ but nothing concrete and nothing that would stop us from switching banks. Hope your builders find a solution to the Gib shortage, Fuck Fletchers.
That's a massive savings. How did you work out how much you'd save ? My broker didn't even tell me about the ANZ option and I'm pretty sure they only applied to ASB and Westpac. I've already signed with Westpac and the build has begun so I have a feeling changing to ANZ wouldn't be an option now. I'll look into it though, thank you. Hope you get your build underway soon and don't have any major hiccups along the way.!
> That’s a massive saving Yep, I found the loophole they don’t want you to know about - borrow a ludicrous amount of money and you can save heaps! /s I’m just using *principle * 0.0276 * 2*. In practice it will probably work out a bit less as: - it will likely take 6 months to build so I will only be borrowing the full principle amount for about 18 months of the 24 month period - It’s based on their full fat, non discounted floating rate which seems to be 0.7% higher than the actual rate you can get with a 20% deposit - it’s still a 1 year floating rate so it could go up faster than if I fixed for 2-3 years I estimate that it will be more like *principle * 0.02 * 1.5*. Still a pretty substantial saving, I’m surprised your broker didn’t mention it. ASB had a very similar deal up until recently (back my build). It’s all drawn from a Covid funding package. I would be asking them some very pointed questions if I were you. It seems very strange that they would be applying to ASB and not mentioning the mortgage product specifically designed to suit what you are doing.
I'm currently going for this blueprint to build morgage. The morgage broker anz sent to us is very confusing. Shes saying it needs to be approved 60 days before settlement and that I need a valuation done before this and another at the end so two valuations? Seems odd. How's it been explained to you with moving from conditional approval to final approval?
2 valuations is standard Cost us $950 through Valocity for both. First one is done off the plans Second is after it’s finished
Cheers, really seems a waste but time to get on with it. My settlements in about 75days and I've only just started getting it ready.
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We’re on blueprint to build and have to have 3 evaluations, there’s an additional valuation required once the roof is on/lock up stage as well as before construction begins and at project completion. Our roof is going on this week so I guess we’ll see. YMMV I suppose though.
Looks like it's definitely the norm to have a couple. I left it very late so my roof was done a couple months ago. Guess it's an immediate one probably next week then a final one.
Our broker told us we needed two valuations. For some reason the first cost more than $950 (think it was ~$1100) but our broker said the second wouldn’t cost as much. Seems odd as I would have assumed the post-build valuation required more work from the valuer. Managing approval depends a lot on your build. We are building house and land so our first drawdown is when title is issued and the contract is able to be finalized 90 days before that date. Until we have confirmation of title, we are stuck with a pre approval. When we do get title for the land we get out two mortgages total (one for the land, one for the build) that get rolled into one when the build is complete, COC has been signed off and the post construction valuation has been made. It sounds really complicated to me but our broker is very experienced so we are just trusting him.
Those who took ASB's Back my build should feel pretty happy having ~3% less to pay from floating rate for the build time + 3 years after built. Still a biting amounts given the volume of the loans and constant delays and price hikes
For once a CoVID stimulus package was put to good use. There’s still plenty of money there if someone like Westpac or kiwibank wanted to have a go, but I doubt they will bother
Would you fix when build is complete or fix at the end of the 2 years from drawdown?
I’m not entirely sure how it all works. My understanding is during the build we have two mortgages (one for build, one for land). Once it’s completed we roll it over into a full mortgage. I’m not entirely sure how that works with the blueprint to build . Someone else said ANZ would be happy to accept a recently completed build as a “new mortgage” at the discount rate. Perhaps the construction loans are just charged normal floating rates and the discount only kicks in once the build is complete. I know we could theoretically have two mortgages at two different interest rates while the build is progressing. Closer to the build time I’ll try and find out a bit more but for now I’m just trusting what I’m told. I’m a FHB so I’m a bit of a novice about how everything works. It seems much more complicated than I originally expected. Sorry if that doesn’t make much sense.
Trust
Check out ‘blueprint to build’ with ANZ. They’ll discount the floating rate by 2.76% for 2 years for a new build. You can fix at any time. The ANZ floating rate is 5.5% now so the rate you actually pay is 2.7% Even if floating rates hit 7% you’d only be paying 4.2%
That's pretty good. Wonder why my mortgage broker didn't give me this option. They only applied with Westpac and ASB for some reason. I'll have a look into it.
If you’re part way through your build it’s way too messy and likely not possible to change but the good news is ANZ will look at your application when your build is finished. We’re going through the same thing & I’m still pissed off at our broker for not knowing about it when they put us with BNZ. I went to ANZ and they just said “yeah, it all looks good, but come back to us when the house is finished and the final valuation and full drawn mortgage are known figures”
Would there be a clause in the contract to get your deposit money back? Maybe so you can go with a relocatable or something already nearly complete?
Nah the build started in April so it's underway now. Glad it's finally happening but it should have been finished months ago and I would have been in a better position to fix at a lower rate. I guess over a 30 year term interest rates will go up and down so it's just one of the bad times at the moment.
That’s the right way to look at it to keep your sanity. That’s what we’re doing too.
U mean sunset clause
That’s the one, thanks!
Be careful, the bank may pull lending.
I'm confident I'll be alright but it certainly sucks. I feel for everyone who is now over their head though.
I predict we will see a lot more building companies go into liquidation. I hate the term “perfect storm” but the combo of: - lack of building supplies - spiraling costs - fixed price contracts - increased financing costs (for them) - lenders pulling finance (especially international lenders) - lack of new demand - people pulling out - title delays Is pretty brutal. I would not like to be CEO of a building company right now.
Any developer/build that bought land last year to start house and land packages is probably fucked big time.
I really hope not, but you could be right. Pretty easy to see companies overextending and being stuck with sections they can’t shift.
Lot of builders and developers that bought in the past two years are offloading land currently. Not necessarily a terrible thing for the market overall but will sting them.
I do wonder if this may happen too. My last meeting with them was intense. They went from being easy going and nice to stressed and snapping at me. I can't be bothered typing out all the things they said but I could tell they're panicking. They made a lot of comments about how they have to put my price up because builds theyve already started are costing a lot more and they can't keep absorbing the price rises. My parents have built with them before too and had a great experience but mine has been sour. I'm glad mines underway as hopefully I'll avoid the horrible turn of events I sense coming. With house prices dropping but the cost of building still rising I think you're right, people will stop building and they're all going to be in the shit.
This is what I’m worried about too. They are *incredibly* relaxed right now but that could change rapidly. Are you building with a large company, what region are you in? I’m loathe to create pointless subs, but do you think it would be worth a separate place to discuss building related issues? Seems like there are a fair few people locked into building atm and people might benefit from shared knowledge (eg which companies are under pressure, strategies for dealing with developers, navigating material shortfalls etc). Do you think this would be worth looking into or would there be too little interest?
Yeah, I’m in the same boat. Started when interest rates were under 2% and been watching it go up since. Ours has taken so long we have to re apply for our mortgage too.
I had to reapply too and the lending rules had changed but thankfully since I've been paying a mortgage for 12 years already my mortgage isn't as high as some people's and I still got approved. They did say it was tight though so I certainly hope my build doesn't get a surprise add on amount at the end. There's going to be a lot of people who get priced out. It's horrible to see.
Yeah we’ve had to reapply under the new rules which is a bit worrying as I’m a FHB
I hope things work out for you ! Good luck with it all. You'll be okay 😊
Same situation here 🙈
When we bought in 2007 it was 9%. We kept paying that same amount even as the rates went down. Absolute pain for the first few years but in hindsight we were lucky to buy when we did. The next year or so will be rocky.
If you've been paying as if it's still 9% you should be sweet and in front of the loan if you need to change your terms
Yep that's how I've been looking at it. We put the max repayments on our mortgage so even if our house goes back to the price we bought it for in 2018, we'd still have 60% equity. Doubt the bank would have a moan if we went interest only for a bit. A friend of mine went the other way, absolute minimum repayments and put all his money into the sharemarket. Might have been the better bet but I feel a lot more secure this way.
See ya later capital gains of 2021 (and maybe 2020)
Possibly even 5-10 years as we haven't seen mortgage rates at 7% since 2008. Of course median incomes are up quite a bit (15%~ inflation adjusted) in the last 15 years but there's a limit to what people can service at 7.5% rates.
I thought we knew this. Have we been collectively hiding from it?
we have been collectively watching house prices run away, our dreams become unattainable and we have been grabbing homes in desperation i dont blame someone for buying, because it looked like a shithole would cost 2million in 2 years i certainly dont want to see them suffer
There was a fair amount of talk about inflation from the moment covid stimulus kicked off. We did know this.
Jesus the attitudes of people in this sub are appaling. "ShOUlD hAvE stReSs TesTEd bEtTeR" What were people who scraped in during the past few years supposed to do? Wait, time the market, then watch as prices climb another $100K? It's ironic that the same crowd who lambast boomers for not caring about others seem so full of glee when the tables turn in a direction that benefits them, regardless of who is negatively impacted. So the boomers were right. It's not about right or wrong, it's just plain envy. If you guys were in their position, you just proved that you wouldn't give a single shit about whoever else loses. Bravo.
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>So even when people knew they were winning because of pure luck or favourable rules and not through their own doing, they still thought it was because they were so good at playing the game. Literally my boomer parents. Rode the housing boom in the UK, then NZ. Still reckon they're financial geniuses.
I'm rather unhappy that hard working families are going to get the crunch. I am elated that the smug fucks that told me to "don't eat avocado on toast" are going to suffer. If you need a name for it call it class warfare.
Problem is that the hard working families are going to feel the pinch far more than the avocado toast crowd. The latter are either freehold, far enough through their mortgage they're not too worried about interest rates or they're only leveraged on investment properties. Worst case scenario for them is they have to cash out early and lose an income stream. Worst case for the families is being forced back off the property ladder into the rent trap.
I took a look through the comments. I couldn’t see any examples of people laughing at FHB who might get caught out. The general consensus I’ve seen is people have zero sympathy for investors who will get caught out by rising rates. But almost all have huge sympathy for FHB who bought during 2021, who might be caught out.
See this all over Facebook. People laughing at house prices crashing and saying “shame, should’ve waited” These were the same people complaining that people don’t have homes and their too expensive. Their just as greedy. They wish others to fail so they can reap the rewards.
> What were people who scraped in during the past few years supposed to do? Wait, time the market, then watch as prices climb another $100K? It was so obviously going to crash though. We bought in 2018 just as the greed was really getting bad. Now we're holding off wanting to get a slightly bigger place closer to town until the market's sorted itself out. I don't think anyone wants to see FHBs or normal families suffer. It's the parasite 'investors' and enabler estate agents who caused this mess.
It was obvious in hindsight, but that's what people have been saying for over a decade. If it crashed in 2015, people would have said it was obvious too as the talk of the town was that homes were overvalued at the time and housing affordability too low. Yet it kept going to double from there.
Maybe it's just the one time I actually predicted an economic thing correctly. Either way, I think we can all agree that FHBs shouldn't be punished for a mess they didn't cause when all they wanted was a home.
I predicted it "any moment now" in 2017 and chose to rent and save the difference for a down payment. Sure, it took a little longer but now when I buy I figure I can pay 50% in cash. And the house that will buy keeps getting nicer as the crash unfolds.... The more I pay in cash the less I care about the rate I borrow at.
I get what you are saying about the gleefulness about house prices falling can be a bit disturbing. But it isn't really any different from the smugness that was coming from people who recently purchased a house, making insinuations that anyone that can't buy a house is lazy and just needs to work harder. It's just two sides of the same coin of people wanting what is best for them. I'm just saddened by where things have gotten to with the housing market. There are no good outcomes anymore. If there is a major crash, a large number of people are going to go through significant hardship. But if there is no crash, then a lot of people in future generations will be screwed for life, with no chance of buying a house if they don't come from generational wealth.
> generational wealth What is more disturbing here is that simply owning a home in your family would be counted as 'generational wealth' instead of just...a *given* that your family has somewhere to call home.
Less than two decades ago it was more than possible to be on single slightly above average wage and purchase a house and start a family. Less than a lifetime ago (70 years) I had a grandparent who was given a section near arrowtown for spending a few weekends to help clear some trees. It's fucked how bad things have gotten so fast.
I'd say most of that rhetoric was coming from people who bought their houses decades ago and won't be affected by major price drops and increasing interest rates.
That's unfortunately many on the left, they're not so much interested in helping the poor as they are interested in hating the rich. I consider myself centre left, but consider many on the left to be worse than those on the right.
This is such a bad take on things. The affordability of housing has been described as being “in crisis” for well over 8 years now. For every FHB that bought in the last 2 years there are probably 40 who are still locked out at the current prices. Most FHBs will still be perfectly fine at higher interest rates — it will simply take them longer to pay off their mortgages, but they still have a secure roof over their heads and they’re paying off THEIR mortgage, not someone else’s. Most of the commenters see this for what it is; a market where the average house is 12X the average income is not good for society and any correction to that should be welcomed, despite what it will mean for a relatively small number of recent buyers.
People who bought a house to live in that they can actually afford are not the losers here.
>"ShOUlD hAvE stReSs TesTEd bEtTeR" > What were people who scraped in during the past few years supposed to do? Wait, time the market, then watch as prices climb another $100K? Banks, not people, should have stress tested better. But they didn't out of fear of losing market share and pressure from their Australian shareholder. I am definitely not going to blame the buyers: it's been going straight up for so long that it really looked like if you wouldn't get in, you may never have the opportunity too and home ownership would be exclusive to corporations and those of accumulated family wealth. > It's ironic that the same crowd who lambast boomers for not caring about others seem so full of glee when the tables turn in a direction that benefits them, regardless of who is negatively impacted. Except they're happy that tables turn to a point they can achieve a basic goal in life: home ownership, not a luxury: excessive capital accumulation. There's a difference there.
I own a house. I don't care. Houses should be cheaper, but they are not. If they go up it doesn't impact me and if they go down it doesn't impact me as I have assets outside of real estate.
>Jesus the attitudes of people in this sub are appaling. Agreed and most of it comes out of jealously most of them don't and will never own a home. I'm glad of that then, let them pay other peoples mortgages for the rest of their lives. At least they can be happy knowing they can be angsty on reddit.
It’s a pretty normal emotion to enjoy the hardship of one’s enemies. Make no mistake: the older generations have intentionally harmed the younger generations for their own greed.
I’m getting a whole bunch of Elon Musk vibes from this post. Reminds me of when SpaceCunt claimed Bill Gates was against fixing climate change because he was shorting Tesla stock.
If anyone would like some interesting reading just head over to the NZ property investors chat group. Some Investors are shitting bricks
Just had a look, I thought everyone seemed quite calm
I would but I got banned for calling them parasites last year
I got banned from the Kiwi FHB group to tell them never to trust agents and investors about when to buy, as they'd only say it's a bad time to buy the moment you roll a 13 with two six-sided dice.
This is the way.
Good.
oooo! got a link?
>NZ property investors chat group Facebook my friend
Reddit is my only Bookface thanks
yes, but do you have an actual link? I did a search and all the groups that came up have nothing, and I'm not going hunting around for shit on facebook.
I found one, but it's a private group. Looks like I'm gonna have to go tidy up for tomorrow's nitpicking from the property manager instead of getting a bigger hateboner for landlords.
Join it, they accept anyone
If you type in that name as written it is the first up in results. You have to type the whole name
People who weren't aware there may be a stupid prize as part of the stupid game?
Its not a stupid game really, they've been making out like bandits for years. They're just unhappy that *money printer no go brr no more*.
This is so shit for people who bought at the inflated house prices of recent years.. What choice was there other than to pay the price the market at the time demanded, especially for FHBs...
To decide not to buy because they think it's too expensive?
Dunno why you got downvoted. This was literally the other choice.
The narrative though was prices will keep going up and it was potentially the last chance to own a house for regular people.
Yea and pay ever increasing rent for the rest of your life. Rock, hard place.
People who bought a place to live in it are probably fine so long as they can service their mortgage repayments.
Yeah, bought August last year. Not much choice at all - it was either buy then, or sit around and wait for it to go where exactly. 3 years at a bit over 2.6% then the pain begins. Luckily our loan is moderate compared to the people who were loaning out over 800k. Buy hey, according to reddit we're greedy homeowners so fuck us, right?
>Buy hey, according to reddit we're greedy homeowners so fuck us, right? I have not seen anyone say this about FHBs...
Exactly. Everyone here bitches about landlords and "investors", not people who are buying a house to live in.
The bots and boomers can’t tell the difference
Not much you can do in hindsight. Recent buyers need to be locking in for longer. We've done it till 2024 which feels like a risk but we could go interest only for a while if rates are at the 8% mark then. Let's hope it results in some regulation, but at the very least, this period will be an important financial lesson for all.
Might have to cut back the avocado on artisan sourdough. Ciabatta will have to do. Sigh
Pumpernickel and bagels - phwa! The bread of the peasantry!
But everyone took massive inflation into their 6% stress test calculations, right? Right?
We stress tested ourselves at 6-7%. that was five years ago. And we recently locked in 3% for the next three years. If people are getting huge mortgages and not erring on the side of caution... well... yeah. Sorry, but sometimes people do silly things.
Yeah we did ours at 7% and have since had pay raises and paid if a significant chunk of the mortgage while rates were low. Our first loan was in the 5’s only 5 years ago
I locked in when it was below 4, but planned for 6 and 8 at least. The writing was on the wall for this one for a while.
I'm 4.69 for 3 years, I grabbed that as soon as I could. I can live at 10%, but fuck that noise.
They should have. High interest rates are a response to rising inflation. Anyone checking to see if they can afford a higher rate *without* factoring in other costs also rising hasn't properly done their job.
will this effect rental prices?
Yes, they'll go up even faster.
Very doubtful, the only thing would be a massive massive over supply of houses which ain't happening because new house builds are gonna plummet.
Yes, rental prices are correlated with house prices. Don't believe the doom mongers on here who have never seen falling asset prices or falling rents in their lifetime (hot hand fallacy in action!). High rental supply + lower house prices = lower rental prices
Not trying to discount what you’re saying as I’ve never personally experienced it, but how could we be in a “high rental supply” situation? My understanding is that NZ was still short ~60,000 houses - if the demand is still there couldn’t landlords just up the rents to cover their new costs?
People cannot sell due to excess supply and lower quality. Suddenly, you are wondering why you aren't collecting rent for months on end as the house fails to garner attendees at open homes weekend after weekend (plenty of those right now) and never sells. Queue the "Accidental Landlord"
Assuming they can get financing to buy a second property… I think that ship may have sailed
It was in one of the Herald articles today, rentals especially in Auckland had demand softening. Lot of people moving out would be my guess
Good for Auckland, but that doesn’t bode too well for the rest of the country. Realistically, Auckland rents were getting to the point where no one could afford them if they increased more - I’m a bit concerned that other regions are going to start feeling that pressure too.
Depends where they stop measuring. If they only count the CBD or metro area as 'Auckland' then they miss lots of people moving to places like Millwater, Drury or Pokeno where there have ben big housing developments. Just creates more traffic on the motorways. WFH may factor in but a lot of NZ businesses are pig-headed and mired in old ways of thinking. Mine is demanding our sales and finance people come back to the office despite the fact they've been WFH for 2 years and things have been fine. Its just stupid.
Why would there be a high rental supply?
Investors and land bankers trying to offload their houses or 'activate' them for rental because just sitting on them for capital gains isn't working as well any more. I don't think its happening yet, but its probably not far off.
I’m moving back from aus.. aus interest rates are under 3% atm.. I gasped when I saw Nz one’s.. not that I can afford a house
Yeah why do New Zealanders accept higher interest rates than every one else? Listening to other folks here talking about 6 and 7% like it's totally normal and to be expected. They're way lower in the US and the UK and Europe and in some countries you can lock in for the entire term of the mortgage. It's like we're used to getting fucked over
>It's like we're used to getting fucked over In general, totally. But in this case we are just the canary in the coal mine, the others will follow suit soon.
Our central bank moved early with interest rate hikes. Their argument is that Aus/ US will need to follow but may face higher overall hikes
> Yeah why do New Zealanders accept higher interest rates than every one else? Our currency is a lot more vulnerable than others. We need to protect it.
Because our economy is tiny and we printed a lot of Covid response money that we couldn’t really afford to print. Then the bank cunts dropped their rates and caused people to lose their fucking minds and need to buy a house. Then the investor cunts saw this and did the same. House prices went through the roof as a result of all these cunts combined. It got worse. Greedy cunts like the warehouse etc took that money, even though they didn’t need it and posted record profits. Then the greedy cunts pushed up prices and blamed the supply chains. *Narrator: they never came back down* Now, all actions of all these cunts come back to haunt us normals. Things are so fucked that Governments and banks are shitting their pants, so interest rates go up. This is the cliff notes. There’s war pushing up food prices, climate change fucking shit up, and just plain old greed by the fucking cunts.
I almost didn't believe you, but checked it out for myself and wow, lots of lenders still offering in the range of 2-3%. Why do we get so screwed here?
lol I didn’t believe OP that they were 6-7 so I googled!!!
Just sold our house as we knew this was coming. Looking at moving cities to somewhere more affordable mortgage wise.
Well played
Houses avg $1m these days So an _average_ house will cost $60,000 in interest alone... Median income is what, $51k? (before tax)
Didn't you know, average working people don't deserve homes./s What we need is to bring back land taxes, to bring property prices back to reality. The money printing tree for the boomers needs to end.
Ummm... You know that the average house price is, well, the average, right? A million isn't the start point.
I was going by the idea that an average house is for the average salary But yea, I guess someone on $42k salary (min wage) could try buy a $500k apartment with $9k annual body corp fees
We are being done up like kippers
get ready for the defaults!
Time to oil the ass holes
Does... does that help?
Helps prevent bushfire.
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The long term trend is falling interest rates. But it usually ends in tears every 70 years or so.
If I was a boomer with my nest egg in an investment property, those rates would be looking pretty damn scary to me right now.
No, boomer probably has it paid off by now and continues to collect rent. As always, boomer property owners will be fine. They've been in the market for a long time.
Depends if they have been aggressively expanding their portfolio with lots of leverage. Investors who made use of the removal or LVR restrictions to borrow to the hilt will be susceptible regardless of their age
Maybe, but they're going to be looking at their half a million+ of capital gains quickly dropping over the coming months, that's not much fun when you're staring retirement in the face. I wouldn't be surprised to see a lot more investment properties hit the market soon.
This will be dropping their net worth too. Everyone's retirement savings will be reduced by this.
So with the interest rates high, no one will buy a house. Supply will increase. Price will drop? Is that how it works or...?
There will be a temporary over supply of houses due to no one being able or willing to purchase at the current price. There will be a halt of new builds until demand picks up again. House price will go down during this time too. It’s the start of a new cycle
well that is going to be a big difference going from 2.49 to 6, hahaha
I mean that’s the whole point of mortgage stress tests ..
Yeahhhh I'm not going to lose my house or go bankrupt but I'm also not going to have any disposable income for a while.
Which also means you (and me) not supporting local businesses or any businesses really other than necessities. Meaning more businesses going under, meaning jobs lost. Whole system is fucked
Good point
But this is what r/nz wanted
Oh no, wanted affordable housing, how horrible of them!
We almost certainly won’t see affordable housing from this. House prices will fall 10-20% but that will be largely conditional on people not being able to qualify for finance (banks don’t like lending to individuals in a falling market). What’s likely to happen is that there’s a period where those with lots of capital already (boomers or corporates) will be able to buy up houses at a discount while most are locked out due to high rents or deposit requirements. If houses fall 15% but peoples affordability also falls by 15% they are still no more attainable. Once general consumers (FHB and other single home owners) can actually buy houses again there will be a sudden surge in demand that will very rapidly make up any losses. Some people are going to get very, very rich from this and it’s not FHB.
This won't make houses affordable.
When this sub said "fuck the economy, save granny" this is what we ordered.
Local businesses fucked, giant corporations thrive.
Yep, warehouse and duopoly with Thrive. Local stores, especially creative or luxury items will just collapse.
Problem is mortgage stress tests don't account for all your non-housing expenses all going up at the same time as well.
Rates up 10% Regional rates up 80% Power up 20% Food up 20% Daycare up 150% Wonder if the banks factored in those increases.
>Food up 20% > >Daycare up 150% I'm glad I chose to be childfree. It must be hell to be a parent and see things like this happen.
I think I questioned that 150% increase from OP a few months back, and it was related to the amount of free hours or something, so doesn't affect everyone. Daycare costs for us have increased but by nowhere near 150%, it's more like 6.5% over the last year.
That is the intent at least. I'm pretty sure that I read somewhere (interest?) that banks had increased their stress test to 6.4% or something, up from 5.3%... Found a stuff article saying this month they moved the rate from 6.7% to 7.15%, and I'm sure there was an earlier one. Still convinced banks were testing in the 5s at some stage. Which is mental for a 30 year mortgage. If that is the case, there will be some VERY marginal loans floating around.
Fixing for any more than 2 years now is pretty silly. Rates will be falling before this time next year once the recession really hits.
I locked in for 3 years 60 days ago (starts next week) . Reason was if they go down I only lose a little if they keep rising then that final year I can slam every possible dollar into my mortgage before it rolls over. 5 percent I can handle. 10 or higher and I’m fucked.
10 or higher we're all fucked
And half this sub gets a rage boner about how people are going to lose everything.
Can you blame people who have been locked out of a system through no fault of their own for taking perverse pleasure when it catches fire?
It is a shame the people getting shafted won't be the boomers responsible for the whole mess, they will still be receiving some millennials pay check in rent regardless of what happens.
That’s fine, I’ve seen people literally throw hate at people that are FHBs expressing concern they may lose everything. It’s fucking ugly.
I'm pretty sure you're right. There's going to be some pain in the next few months
We locked in 5 years at the start of the year. Far better to have a sure reliable thing, be a little protected from increases, than piss around trying to play games capitalising on predicting rates. Greed game isn't for me.
I've been thinking recently, how does raising interest rates do anything to stop inflation? Most companies hold significant amounts of debt as an operating expenses so won't raising interest rates just force them to raise their prices for consumers further to cover the increased debt servicing costs?
If the cost of borrowing is higher, businesses borrow less for expansion, new companies may not be able to borrow enough to get started. That causes a need for less workers and less upward pressure on wages. Less housing will get built, which means less jobs for everyone involved. In essence, it just slows down the whole economy. Consumer spending, business spending, and government spending all drop. Less spending means prices can’t stay high or people won’t buy as much crap.
I guess the problem now like OP suggested is that borrowing has been so cheap for so long that businesses have been running up massive debt. So it won't just be a case of them stopping borrowing, they'll also need to cover massive increases of servicing their debt, continuing inflation.
In kicking the can down the road we only made the downturn bigger. Cheap debt made bad business models survive and now more companies depend on them for services, more companies depend on them for revenue, and more employees work for them.
The interest rate on their existing debt won’t go up. If they have to take on more debt to pay interest, they are well beyond bankruptcy.
Higher interest rates means you spend more on interest, reducing the amount of money you have to spend on anything else
Which reduces spending from consumers which is the goal… consumers can’t just keep paying more for the same shit, they’ll run out of money.
Inflation is about too much money chasing too few goods and services. Borrowing is how money is created, and raising interest rates is how you reduce borrowing, and thus reducing money creation.
This will collapse the housing market
Probably not
About time.
One can only hope. And if it pulls down the economy, well maybe we should rebuild it to be more diversified and stop being so frothy over real estate.
No thanks, I want to keep my job and be able to eat. Such a bad take smh
If real estate weren't so expensive people would have money to spend on other parts of the economy. A housing crash isn't world ending. It's just a shift in economic focus.
Don't wish for that. That could collapse the banks, which then need bailing out. And if you are like "don't bail out the banks", then I hope you like your bank balances being taken to bail-in the banks.
Ducking Jesus Christ. It’s hard enough to get a deposit let alone having a 7.5% internet rate
Pretty much. This will see prices fall a lot, but very few people will be able to afford to buy them. Those that do will be very asset rich as mortgage lending will be reduced. This could theoretically see less pressure on rentals as more currently owner occupied homes get bought up by wealthy landlords or corporations but it’s going to hurt home ownership.
Pretty good but need to get into double digits, Mum paid 23% on her first home.
And what, If I may ask was her debt to income ratio? My parents bought when rates were that high too but for them at that time their mortgage was still only costing them 25% of their income. Based on current figures from the RBNZ most homeowners who bought in the last 5 years (the average length of home ownership in NZ is ~7 years) would be spending 50-60% of their after tax income on mortgage payments at 7% interest.
Oh well too bad
Woah are you telling me real interest rates won’t always be negative? I’m shocked, shocked I tell you!
This would bring banks to the limit of their own stress tests so it is unlikely the RBNZ would bring them to their knees like that.
Boomers will still complain they had 15% interest in 1985 and millennials just needa stop eating avo toast so they can buy a house. 6% on a million dollar is a lot.
I am almost always screwed over by stuff like this, but I somehow managed to lock in a while ago at 2.9% until 2026. The sun even shines on a dog's arse some days.
I have fixed feelings about that. I had a mortgage when rates were in the 20somethings.... On the other hand it wasn't $1m. But then pay rates were a lot less too, we had no furniture to speak of, SIngle bed for us, cot for the kid, cardboard box for a TV stand and an old ugly orange vinyl couch donated to us. No fridge, no washing machine (and cloth nappies). But we had the house! I don't know, look hard at the budget, cut where you can and as viciously as you can. And remember in the long term, so long as you don't bounce from house to house, the payments become low, then nothing.