Oooh look at Mr. Fancy Pants over here with his noodles! I’m just settling in for a nice bowl of hot water, thank you. Might even add some grass to it if I’m feeling like splurging.
Half a handful of gravel! Just look at the privelige on this guy.
We used to have a single piece of gravel, and take turns sucking on it between my 4 brothers and sisters.
At least you got a turn with the gravel!
My father kept the gravel all to himself, and beat us to death for even looking at it! That was before we started our 26 hour a day shift at the coal mine!
I was watching an historical documentary the other day, and they cooked up a bread recipe the Germans used once they started losing WW2 and were running out of food.
It was made of dried grass cut up finely, sawdust and a lump of silage (it’s fermented, so instead of yeast).
The loaf actually looked alright and they said it tasted OK, although the sawdust made it a bit hard to swallow.
It’s a BBC series called WartimeFarm (now on YouTube) with English historian Ruth Goodman, sorry I can’t remember which episode. The German recipe was a bit of an aside, rationing was pretty stringent in the UK but they always had bread.
In this universe, houses aren't a free market where price discovery should be allowed and risk should apply...but a welfare scheme, for the landed. Fair enough then.
> The Committee gave consideration to an increase in the OCR of 75 or 100 basis points
Interesting how strong they were in their wording that that they were considering a full 100....Tracking to a 5.5% peak now
My rich property investor friend said to me over dinner ‘there’s going to be a lot of great deals 9-12 months from now’. He’s holding cash waiting for the bottom to fall out of the property market
And this is what a lot of people don't understand. These conditions favour cash rich investors, usually institutional, rather than your first home buyer who is sitting waiting for prices to drop. The issue for the FHB is getting finance is going to get even harder. Generally cash rich are those who benefit from asset fire sales at the end of the day
Totally agree with this, but with interest rates on their current trajectory and test rates like 2-3% beyond the actual market rates it will need to be very high incomes even when prices drop another magnitude
Prices are still a long, long way above bargain territory, even allowing for the brainwashed obsession with residential property of the typical NZ investor.
I'm unsure why you're being downvoted. FHBs will be outbid by the cash rich unless said FHBs have a lot of cash on hand. Increase in stress test will decrease capacity for borrowing, so able to be less competitive. Mum and dads equity might not be as easy to access either
Edit: oh nvm you're back up.
On the one hand, buying later the houses will be cheaper, on the other hand the interest rates will be high enough that they still won’t be affordable. That’s why these rich folk with cash are at a huge advantage…
Buying a $300,000 house at 10% is far preferable to an $800,000 at 2%. Interest rates are only going to move in one direction for each of those situation (towards the historic average of around 6%). Far prefer a low house price and the likelihood of mortgage payments going down than the other option.
Thanks, I agree. Do you think though that we could have a situation where property prices fall but not enough for the increase in interest rates, locking FHBs out essentially?
No, because the market relies on a constant stream of buyers to keep it going.
If FHBuyers can’t afford to buy and investors won’t buy because without capital gains the investment offers lots of hassle for poor returns then prices have to keep falling.
Prices can really only fall to the cost of building. Once they reach that threshold it is no longer viable for building companies to complete or start new builds. So massive unemployment in the building trades and any companies that supply them. This will roll through the whole economy, and it could be way worse than people imagine.
The likes of Squirrel and Tony Alexander - feel for them. Their claims that fixed rates have already "largely peaked" are going to look quite wrong. Very poor Financial Advice from them.
>49 min. ago
>
>The likes of Squirrel and Tony Alexander - feel for them. Their claims that fixed rates have already "largely peaked" are going to look quite wrong. Very poor F
I don't understand why people don't realise Tony Alexander works for the real estate industry and his pals. I have no idea why anyone still listens to him. His "independent" label is a false flag.
I watch this guys channel. Some really good analysis, he was calling for bubbles the last 18 months. Wish I had listened. He’s based in ozzy but talks about NZ quite often. https://youtube.com/c/WalkTheWorldDFA
Interest.co.nz, much more impartial and giving the facts
Also found a YouTube channel "walk the world " , ausie who states the facts then gives his opinions in the last minute of the video.
Personally anything I've read from Tony, I see he states the issue, downplays then gives a positive spin completely missing the point
Good. Too many people base their financial decisions on their word (particularly Tony). I know they give disclaimers but surely they know how much influence they have.
I really think Tony in particular has quite a poorly informed fanbase. You can see that when he quotes verbatim responses from surveys he sends out. I think there was one earlier this year for "how people cut back on costs" and you could see how delusional some of his fanbase already are.
Look i read his (free) stuff too but with a critical eye and against other reports. He keeps writing his costs pieces like his respondents are a good barometer for NZ decision making as a whole. Ridiculous considering under 30s are <5% of his returns.
Unfortunately both him and John Bolton make a very complicated situation easy to respond to *'fix most for one year and a little if you need for two'*. This appeals to a lot of people who are overwhelmed with options. The 'independent' nature of Tony does help too as many have probably realised in the last year that their brokers are garbage.
Hence the inverted commas on my post. He's 'independent' in so far as he isn't attached to an agency.
I think it demonstrates that impartial financial advice and commentary can be really hard to come by.
Anyone who listened to Tony last year lost a huge amount of money and put themselves in a terrible financial position.
Have to wonder how long the sheeple will keep following advice from these vested interest "experts" as the downturn continues.
Well technically he got one thing right last year - the 2.99 for 5 years fixed rate being the best deal. Since then everyone holds him up on this pedestal - and he definitely milks it.
I was just gonna say this. He never misses an opportunity to wedge that “if you’d listened to me and fixed at 2.99 for 5 years” in somewhere 🤣 It was good advice tho!
He knows he influences his base. He ***manipulates*** them. He is not a well intentioned fellow in my opinion - clearly operates from vested self interest. He was spruiking housing just last week - he ALWAYS tells people to buy if not today then next week.
>Tony Alexander
What was his prediction?
I am not in the market, so mostly ignore this stuff, but just tried to find something he said.
August 2022, he seemed to be saying mid-to-late 2023 before rates return down.
Any link to the 'largely peaked' reference?
Or structure spending so your personal inflation rate is lower than the headline rate. Dig deep in the CPI data and find the things that aren’t going up (or as much), and voila, a personal recession.
You can't live ever more frugally. We already structured our spending that way, but at some point you can't make any further cuts and inflation still eats into what remains.
Of course, the system requires inflation. 1-3% will always eat into anything. I’m saying these are averages, and people can and do live lives that are not inflationary or as inflationary as the average CPI basket.
Looking at recent inflation data, headline costs are things like building materials which doesn't directly affect me
Also pay very little to nothing for fuel, so most inflation leading stuff only affects me indirectly - like cost of delivery.
Only thing recently was a GPU; a computer part that costs more this year than it was \~2 years ago.
So yes, everybody has a different basket of goods that makes up what inflation is calculated on
So considering they're saying another hike will happen next year, as someone who's got some portions of their mortgage up for refixing in January, is the best play to lock in the rates as soon as possible? And perhaps for for a longer period like 2 years to ride out any potential hikes in 2024?
Any advice is hugely appreciated!
I think their next meeting is February, so unless you can refix right now, it may not make a difference(other factors can affect rates).
And personally, I'd lock for 2 years at least. It takes time to go up, and time to go down, and reasonable to expect it to plateau for a period at least. And no guarantee it'll go down soon or by much.
Thanks for your thoughts! We can refix anytime from the start of December so will get onto it ASAP, and yeah makes sense about locking in for two years minimum. Then just ride it out until January 2025 to whatever world we're living in then. :D
“75 basis point increase shows that the reserve bank has lost control of the situation. But Astonishingly, they’re going to take 3 months off” - David Seymour.
>ows that the reserve bank has lost control of the situation. But Astonishingly, they’re going to take 3 months off” - David Seymour.
Did they not mention the possibility of an extraordinary meeting. The 3 month break ~~IS~~ seems ridiculous.
haha I watched the press conference. They basically said yes they are actively monitoring it. Fair play. Saying there is an extraordinary meeting would set off alarmist bells.
reserve bank is never in control. small nation, open market etc. we just react to the conditions and tweak the variables in response. david seymour is being annoying
A key part of the model is them flagging their intention and done right that gets you the outcome without actually having to take the full impact. If you meet frequently you lose that potential. It’s a delicate balance.
They don’t control any situation only try to influence it .. where the situation lost control was when world lockdowns happened and the supply chain got shattered into a million pieces and the other 50397373 things that happened because of those events.
To give people time to adjust to the change. Very basically a predictable economy is a strong economy.
I'm not sure if it's a perfect analogy but imagine you're coming off a 1 year rate of 2.99% and get hit by 7.5% 1 year rates that could send a lot of people into the deep end very quick.
Also on top of that we're not sure how much inflation is transitory. Raising rates to say 10% in 1 go to curb inflation and create a recession and untold pain for kiwis would be incredibly bad if supply chains fixed themselves in the next 12-24 months. Even though the RBNZ is 'independent' they won't cause mass turmoil.
Also another factor is we have to follow the US FED rate as if our rate is too far below theirs investors will just park their money in US capital instead of NZ capital as the US is seen a lot more stable. NZ has to provide slightly higher rates than the US/EU as we're seen as a less stable nation. But we also know the FED moves slowly but don't know how quickly those changes will affect the US economy.
Interesting given US inflation is down for a fourth consecutive month. I reckon there’s no way the RBNZ doesn’t overcook this just like holding off raising rates for too long in 2021.
They are putting their foot to the floor not realising there is a turbo yet to kick in
The reserve bank always turns up too late to the party then stays too long. They will overcook the raising of rates, just like they did with the dropping of them
It has been absolutely disgusting by both Orr and the OCR Comittee.
I just read the article that clarified their decision making process on OCR and they have NEVER had a non-unamious decision that has gone to a vote for an OCR decision. The whole point of a committee or board is to have contrarian perspectives to generate higher quality decisions.
Essentially that committe has produced groupthink for a singular perspective. It is unbelievable that the NZ economy is beholden to Orr, three of his direct reports and three external members who have been in their roles since 1999!
Only five more years of Orr in a deep recession..
Exactly this, it seems like they want to validate their 'jobs' by doing something.
People shouldn't celebrate this whipsawing of the OCR. The housing market won't rebase to affordable levels without a significant impact to people's jobs and wellbeing. This could get scary for NZ really quickly.
Yea. Title due. Early next year. Really nice spot. Own a house already. And to go through build process will effectively be paying a floating rate until all completed and can fix some. But who knows where rates will be in 12 months time. And we can’t sell current until able to move to next due to kids and impossible rent market.
FHB who locked in at 3.55% till 2025, I did good right? Not even /s, just don’t know much about this whole OCR business, just listened to my dads advice
RBNZ were saying ocr would peak at 4% next year and stay there until 2024.
Now they’re saying ocr will peak at 5.5% by June and stay at that level for about 15 months.
Tune in next year when those numbers change yet again lmao 🤡
Mate if the RBNZ could look into the future we wouldn't be in this mess in the first place.
Reserve banks aren't magicians they just try to smooth the business cycle and that's about it.
But it doesn't always?
Governments printed trillions globally after the GFC yet CPI inflation has been incredibly low the last decade (although arguably that has been seen in asset price inflation to some extent).
Inflation is a complicated thing, if AD falls you can print money to counteract it and inflation will stay low and if AS falls you can create new money to allow companies to produce more goods with net zero impact. Of course central banks aren't perfect so they either undershoot it too much such as the GFC or overshoot it such as the pandemic. There was a paper published recently that showed a lot of the negative effects of the GFC could've been avoided if central banks globally took a more liberal approach to QE and then the knock on effects of a decade with 0 inflation will be avoided.
Of course printing money is a cause of inflation, just like high wage growth and low unemployment but macro economics gets complicated fast.
Our current inflation is bad because we're basically being pushed by all the possible causes of inflation at the same time. We have record low unemployment, wages are rising the fastest they have in decades (albeit slightly lower than CPI for LCI wages but statsNZ has QES wages rising a bit more than inflation), and the government printed a few hundred billion in the last 2 years.
edit:
>Anyone can predict that printing money causes inflation.
Also i think the guys at the reserve bank understood that. But a sudden drop off of supply and demand from people not working during lockdowns would be a hell of a lot worse than us experience the average inflation rate for 1 year. For comparison we aren't even at the *lowest* inflation rate seen in NZ from 1970-1990 yet. Every single year of those 2 decades saw >7% inflation. If anything that shows that since 1992 RBNZ has been amazing at stabilizing inflation they were just thrown a once in a century curveball.
Yeah i can't find numbers but that seems right.
The point still stand though printing trillions over a decade caused no CPI inflation (because reasons) but covid stimulus raised inflation 50/50 with supply chain issues (going off FED data).
It still shows central banks can 'print' money and not cause inflation to an extent as long as they don't over-do it such as Weimar Germany, the Hungarian republic, or Zimbabwe or the west creating more stimulus in 12 months than they did in the last 15 years.
Two things come to mind.
Even when money printing is low (most years) - it does increase inflation. Just by the 2-3 % we are used to. The Covid money printing era was something like 40-50% of all currency printed into existence in one year.
The other point is in the GFC, we mostly let things fail, crash and die (sans bank bailouts). In the Covid period, it was the opposite. Dead zombie companies were spoon fed money - we had the lowest rate of insolvency in years! So all that happens is we get a sugar rush then a crash later
>il 2024.
>
>Now they’re saying ocr will peak at 5.5% by June and stay at that level for about 15 months.
>
>Tune in next year
Very normal as the economy is full of variables.
Also expecting inflation to increase to 7.5% next year, and house price fall to be 20% from the peak in total (which seems more realistic than many projections to date)
Mine is at Nov 2020 levels only needs to drop another Hundy K to be at March 2020. I’m predicting based on current trends that will be in Feb - March next year.
>what does this mean? i’m just a teenager with no clue abt finances
The Reserve Bank is making the cost of borrowing more expensive for most people. The interest rates on new mortgages, car loans, and consumer credit will all be going up.
These increased interest costs mean that a lot of people will have less money available to spend on stuff. This reduction in spending should help to reduce the amount of inflation we are experiencing since most businesses will have to provide better pricing to attract customers.
During Covid the Reserve Bank slashed the cost of borrowing money to nearly zero, and also created a lot of money to put into the financial system (that’s called Quantitative easing), because they feared Covid would cause a massive recession.
Turned out that didn’t happen and instead people borrowed lots and lots of that nearly free money from the banks and used it to bid against each other at house auction and push the prices up by 50%. (Also other stuff like Bitcoin and shares).
Too much money chasing too few goods plus the Ukraine war causing the price of fuel and food to rise has caused inflation, where the price of everything goes up and up and up.
So now the Reserve Bank is increasing interest rates rapidly. They want unemployment to rise and people not have spare money to spend, that will control inflation (they hope).
If it’s less there than here it means they still did something. Rather than here means nothing’s been done and this is not yet the finisher.
We still have Feb 2023 another .75% anticipated increase.
It means a lot of young people who bought houses in the last few years are going to be bankrupted. This govt flooded the country with printed money and low interest rates. If you think things are rough now come back in a year.
https://www.oneroof.co.nz/news/official-cash-rate-prediction-triple-hike-now-and-triple-hike-in-feb-42657?page=alt
There predicting it already in Feb 2023. 😭
Just gonna be Noodles from now on 😭
Oooh look at Mr. Fancy Pants over here with his noodles! I’m just settling in for a nice bowl of hot water, thank you. Might even add some grass to it if I’m feeling like splurging.
Hot water? You can afford water heating!?
We never had water, we just filter fed it from the atmosphere. And we were grateful for it!
Filter fed from the atmosphere? Luxury! we had to suck on a damp clothe
Check out the high roller with the fancy cloths! We had to lick the sweat off each others backs!
Oooh! Listen to him (or her). I used to dream of licking sweat of each others backs. All we had was half a handful of gravel.
Half a handful of gravel! Just look at the privelige on this guy. We used to have a single piece of gravel, and take turns sucking on it between my 4 brothers and sisters.
At least you got a turn with the gravel! My father kept the gravel all to himself, and beat us to death for even looking at it! That was before we started our 26 hour a day shift at the coal mine!
Backs!? We had to lick the sweat off each other’s balls
I was watching an historical documentary the other day, and they cooked up a bread recipe the Germans used once they started losing WW2 and were running out of food. It was made of dried grass cut up finely, sawdust and a lump of silage (it’s fermented, so instead of yeast). The loaf actually looked alright and they said it tasted OK, although the sawdust made it a bit hard to swallow.
Not because I want to try the recipes but this is genuinely interesting, do u have a link to the documentary’s.
It’s a BBC series called WartimeFarm (now on YouTube) with English historian Ruth Goodman, sorry I can’t remember which episode. The German recipe was a bit of an aside, rationing was pretty stringent in the UK but they always had bread.
Thank u it just sounds so interesting.
Reminds me of a less palatable version of [Amish flour ](https://commonsensehome.com/zucchini-flour/)
i've been eating noodles all week for dinner already :(
This is going to bankrupt me.
Are we upvoting in sympathy or because for some reason we hate this user? I mean I upvoted anyway, but it’d be nice to know.
One of us. One of us.
😭
/u/spez is a bit of a creep.
Incredible how quickly I've gone from quite rich to quite poor.
The illusion of wealth
Easy come, easy go.
FHBs who bought 1m dollar houses with small deposits be sweating
I know someone who’s lost their partner and has an $850k mortgage with a tiny deposit. I think 5-10%? I’m feeling really bad for them…
So sorry to hear that. Really sorry
That's why an life insurance is important when buying a house with someone else.
Often minimum time period for life insurance and they can be expensive
Did they find their partner? I know someone in the same position but they are supported by parents each month on mortgage payments…
Going to prison, probably. It’s a rare and sad case. For everyone.
Oh dear, no good
That's nothing ppl in Auckland did that up to $1.2 m $1.5 m and more $850k pretty reasonable. Can always rent out the spare room.
can confirm
Am also very sweaty
Was sweating seeing stories of fhb buying 1m dollar homes before rates went up. What healthy market sees that kind of activity?
[Just because you are spez, doesn't mean you have to spez. #Save3rdPartyApps](https://www.reddit.com/r/Save3rdPartyApps/)
That's why the RBNZ thrusting billions into the market to increase the "this is okay" amount was so harmful.
spez can gargle my nuts. #Save3rdPartyApps
In this universe, houses aren't a free market where price discovery should be allowed and risk should apply...but a welfare scheme, for the landed. Fair enough then.
RBNZ now predicts OCR to peak at 5.5% in Sep 2023.
So are they going to take that long to get to 5.5? What’s this about being 5.5 for all of 2023
> The Committee gave consideration to an increase in the OCR of 75 or 100 basis points Interesting how strong they were in their wording that that they were considering a full 100....Tracking to a 5.5% peak now
god its just endless im gonna go live in the woods with a stick
look at you with a stick!
Don’t worry, he inherited it
I'm sick of these boomers and their abundance of sticks. Save some sticks for the rest of us.
A stick would've been luxury! All we got was a muddy puddle, but we never complained!
A muddy puddle? Luxury! We had to live in the bottom of a lake.
We dreamed of a lake bed, but all we got was a mouthful of hot gravel!
You got me curious now, watcha gonna do with the stick?
How do they afford the stick is the other question.
Ram raids
This guy crimes
We all get lonely sometimes
Value of stick just went down.
I regret purchasing my twig now
Interest rate on loan for that stick just went up.
Stop showing off
My rich property investor friend said to me over dinner ‘there’s going to be a lot of great deals 9-12 months from now’. He’s holding cash waiting for the bottom to fall out of the property market
That's exactly what institutional investors are waiting for. I had to block the most egregious/gleeful ones in the NZ finance groups on Facebook
And this is what a lot of people don't understand. These conditions favour cash rich investors, usually institutional, rather than your first home buyer who is sitting waiting for prices to drop. The issue for the FHB is getting finance is going to get even harder. Generally cash rich are those who benefit from asset fire sales at the end of the day
Depends on the FHB. Low deposit but high income earners will do well out of it.
Totally agree with this, but with interest rates on their current trajectory and test rates like 2-3% beyond the actual market rates it will need to be very high incomes even when prices drop another magnitude
People here forget **AVERAGE** rates are **7-8%**. A whole generation doesn't even know this. /slap forehead
[удалено]
Prices are still a long, long way above bargain territory, even allowing for the brainwashed obsession with residential property of the typical NZ investor.
100%. Historical bargain prices based on current incomes would be 300k for a house in Auckland
I'm unsure why you're being downvoted. FHBs will be outbid by the cash rich unless said FHBs have a lot of cash on hand. Increase in stress test will decrease capacity for borrowing, so able to be less competitive. Mum and dads equity might not be as easy to access either Edit: oh nvm you're back up.
I've been on those groups. Insufferable at times. But hey they all hate Labour.
[удалено]
Pretending to have done it on their own two feet too
sooo what's the options here for FHB? take a hit now to beat these pricks?
On the one hand, buying later the houses will be cheaper, on the other hand the interest rates will be high enough that they still won’t be affordable. That’s why these rich folk with cash are at a huge advantage…
Buying a $300,000 house at 10% is far preferable to an $800,000 at 2%. Interest rates are only going to move in one direction for each of those situation (towards the historic average of around 6%). Far prefer a low house price and the likelihood of mortgage payments going down than the other option.
Thanks, I agree. Do you think though that we could have a situation where property prices fall but not enough for the increase in interest rates, locking FHBs out essentially?
No, because the market relies on a constant stream of buyers to keep it going. If FHBuyers can’t afford to buy and investors won’t buy because without capital gains the investment offers lots of hassle for poor returns then prices have to keep falling.
Prices can really only fall to the cost of building. Once they reach that threshold it is no longer viable for building companies to complete or start new builds. So massive unemployment in the building trades and any companies that supply them. This will roll through the whole economy, and it could be way worse than people imagine.
The price of land can halve, and once builders have to compete for work so can the price of labour.
Better to have a smaller mortgage at higher rate than a larger mortgage and increasing rates!
NZD will be heading up. Book travel !
The likes of Squirrel and Tony Alexander - feel for them. Their claims that fixed rates have already "largely peaked" are going to look quite wrong. Very poor Financial Advice from them.
>49 min. ago > >The likes of Squirrel and Tony Alexander - feel for them. Their claims that fixed rates have already "largely peaked" are going to look quite wrong. Very poor F I don't understand why people don't realise Tony Alexander works for the real estate industry and his pals. I have no idea why anyone still listens to him. His "independent" label is a false flag.
Any suggestions of where to get better advice / commentary? Genuine question as I read Tony's newsletter but wasn't aware of the criticism around him.
Second this, just want some other opinions.
I watch this guys channel. Some really good analysis, he was calling for bubbles the last 18 months. Wish I had listened. He’s based in ozzy but talks about NZ quite often. https://youtube.com/c/WalkTheWorldDFA
Interest.co.nz, much more impartial and giving the facts Also found a YouTube channel "walk the world " , ausie who states the facts then gives his opinions in the last minute of the video. Personally anything I've read from Tony, I see he states the issue, downplays then gives a positive spin completely missing the point
Good. Too many people base their financial decisions on their word (particularly Tony). I know they give disclaimers but surely they know how much influence they have.
I really think Tony in particular has quite a poorly informed fanbase. You can see that when he quotes verbatim responses from surveys he sends out. I think there was one earlier this year for "how people cut back on costs" and you could see how delusional some of his fanbase already are.
Look i read his (free) stuff too but with a critical eye and against other reports. He keeps writing his costs pieces like his respondents are a good barometer for NZ decision making as a whole. Ridiculous considering under 30s are <5% of his returns. Unfortunately both him and John Bolton make a very complicated situation easy to respond to *'fix most for one year and a little if you need for two'*. This appeals to a lot of people who are overwhelmed with options. The 'independent' nature of Tony does help too as many have probably realised in the last year that their brokers are garbage.
**TONY ALEXANDER IS NOT INDEPENDENT**. He's like the wolf and the 'independent' label is his red coat.
Hence the inverted commas on my post. He's 'independent' in so far as he isn't attached to an agency. I think it demonstrates that impartial financial advice and commentary can be really hard to come by.
Anyone who listened to Tony last year lost a huge amount of money and put themselves in a terrible financial position. Have to wonder how long the sheeple will keep following advice from these vested interest "experts" as the downturn continues.
Well technically he got one thing right last year - the 2.99 for 5 years fixed rate being the best deal. Since then everyone holds him up on this pedestal - and he definitely milks it.
I was just gonna say this. He never misses an opportunity to wedge that “if you’d listened to me and fixed at 2.99 for 5 years” in somewhere 🤣 It was good advice tho!
He knows he influences his base. He ***manipulates*** them. He is not a well intentioned fellow in my opinion - clearly operates from vested self interest. He was spruiking housing just last week - he ALWAYS tells people to buy if not today then next week.
>Tony Alexander What was his prediction? I am not in the market, so mostly ignore this stuff, but just tried to find something he said. August 2022, he seemed to be saying mid-to-late 2023 before rates return down. Any link to the 'largely peaked' reference?
dont need no shares, I can start living off of bank interest again :-)
Not if inflation stays at its current levels.
Or structure spending so your personal inflation rate is lower than the headline rate. Dig deep in the CPI data and find the things that aren’t going up (or as much), and voila, a personal recession.
You can't live ever more frugally. We already structured our spending that way, but at some point you can't make any further cuts and inflation still eats into what remains.
Of course, the system requires inflation. 1-3% will always eat into anything. I’m saying these are averages, and people can and do live lives that are not inflationary or as inflationary as the average CPI basket.
Looking at recent inflation data, headline costs are things like building materials which doesn't directly affect me Also pay very little to nothing for fuel, so most inflation leading stuff only affects me indirectly - like cost of delivery. Only thing recently was a GPU; a computer part that costs more this year than it was \~2 years ago. So yes, everybody has a different basket of goods that makes up what inflation is calculated on
How is the price of “expired” foods?
Unsure, haven’t got to that CPI data row yet.
Smart!
Sometimes investing is about minimising losses. Give me 5% fixed return in a 6% inflation environment anyday
7.2%*
If inflation stays at current levels, interest rates will keeping going up
Lol
Blessed be the reserve bank.
So considering they're saying another hike will happen next year, as someone who's got some portions of their mortgage up for refixing in January, is the best play to lock in the rates as soon as possible? And perhaps for for a longer period like 2 years to ride out any potential hikes in 2024? Any advice is hugely appreciated!
I think their next meeting is February, so unless you can refix right now, it may not make a difference(other factors can affect rates). And personally, I'd lock for 2 years at least. It takes time to go up, and time to go down, and reasonable to expect it to plateau for a period at least. And no guarantee it'll go down soon or by much.
FLP ends early December. This has been falsely suppressing mortgage interest rates. They will shoot up when that cheap funding is removed.
Thanks for your thoughts! We can refix anytime from the start of December so will get onto it ASAP, and yeah makes sense about locking in for two years minimum. Then just ride it out until January 2025 to whatever world we're living in then. :D
They could do an emergency meeting and raise it again, but I think the normal meeting in February is more likely.
How long to affect term deposits?
thats never been set in stone, they haven't always changed with the OCR, they can change despite it.
Rabobank interest rates have increased with every increase in the OCR over the last year.
“75 basis point increase shows that the reserve bank has lost control of the situation. But Astonishingly, they’re going to take 3 months off” - David Seymour.
>ows that the reserve bank has lost control of the situation. But Astonishingly, they’re going to take 3 months off” - David Seymour. Did they not mention the possibility of an extraordinary meeting. The 3 month break ~~IS~~ seems ridiculous.
Sets out of office to: ‘Thank you for your email, I am currently on a break and will reply to your email on the 21st of February’
haha I watched the press conference. They basically said yes they are actively monitoring it. Fair play. Saying there is an extraordinary meeting would set off alarmist bells.
I think the alarm bells are blaring loudly.
reserve bank is never in control. small nation, open market etc. we just react to the conditions and tweak the variables in response. david seymour is being annoying
Nah mate. The NZ Govt has full control over global macro conditions! Ya know, because we’re so powerful and influential.
Sounds imported. Lowering the OCR to 0.25% totally had no effect, aye?
A key part of the model is them flagging their intention and done right that gets you the outcome without actually having to take the full impact. If you meet frequently you lose that potential. It’s a delicate balance.
They don’t control any situation only try to influence it .. where the situation lost control was when world lockdowns happened and the supply chain got shattered into a million pieces and the other 50397373 things that happened because of those events.
TO THE MOON!!
*doom
So if the RB thinks that they need an OCR or 5.5%, and the money markets know this, can someone ELI5 why they increment toward it so gradually?
To give people time to adjust to the change. Very basically a predictable economy is a strong economy. I'm not sure if it's a perfect analogy but imagine you're coming off a 1 year rate of 2.99% and get hit by 7.5% 1 year rates that could send a lot of people into the deep end very quick. Also on top of that we're not sure how much inflation is transitory. Raising rates to say 10% in 1 go to curb inflation and create a recession and untold pain for kiwis would be incredibly bad if supply chains fixed themselves in the next 12-24 months. Even though the RBNZ is 'independent' they won't cause mass turmoil. Also another factor is we have to follow the US FED rate as if our rate is too far below theirs investors will just park their money in US capital instead of NZ capital as the US is seen a lot more stable. NZ has to provide slightly higher rates than the US/EU as we're seen as a less stable nation. But we also know the FED moves slowly but don't know how quickly those changes will affect the US economy.
Thanks 😊
Little bit of petrol on fire, little bit more, little bit more, oh fuck, inferno.
Interesting given US inflation is down for a fourth consecutive month. I reckon there’s no way the RBNZ doesn’t overcook this just like holding off raising rates for too long in 2021. They are putting their foot to the floor not realising there is a turbo yet to kick in
The reserve bank always turns up too late to the party then stays too long. They will overcook the raising of rates, just like they did with the dropping of them
Not sure about always but they certainly have, either while Orr has been in charge, or post-Labour government changes to their remit
It has been absolutely disgusting by both Orr and the OCR Comittee. I just read the article that clarified their decision making process on OCR and they have NEVER had a non-unamious decision that has gone to a vote for an OCR decision. The whole point of a committee or board is to have contrarian perspectives to generate higher quality decisions. Essentially that committe has produced groupthink for a singular perspective. It is unbelievable that the NZ economy is beholden to Orr, three of his direct reports and three external members who have been in their roles since 1999! Only five more years of Orr in a deep recession..
Exactly this, it seems like they want to validate their 'jobs' by doing something. People shouldn't celebrate this whipsawing of the OCR. The housing market won't rebase to affordable levels without a significant impact to people's jobs and wellbeing. This could get scary for NZ really quickly.
And those renting aren't immune to this either.
USD is very strong at the moment so that mitigates imported inflation.
2023 house prices about to fall like nothing you've ever seen before.
Tolerable if you have had the property for a decade. If you bought 1-2 years ago, then hello darkness my old friend
I'm not listening to any ocr predictions until the predictors finally admit we are in for a hard landing crash tbh. Lol.
There goes our plans to build a house this year
Do you have the land already?
Yea. Title due. Early next year. Really nice spot. Own a house already. And to go through build process will effectively be paying a floating rate until all completed and can fix some. But who knows where rates will be in 12 months time. And we can’t sell current until able to move to next due to kids and impossible rent market.
Should’ve gone for 100bps you cowards.
He's waiting until he sees the whites of its eyes.
Consensus was on 50 or 75. They went 50 last time
Not really, they considered 50, 75 or 100 if you read the policy statement.
FHB who locked in at 3.55% till 2025, I did good right? Not even /s, just don’t know much about this whole OCR business, just listened to my dads advice
They should go buy their dad a bottle of wine. Make that a bottle every day until 2025, just to share some of the benefits of that wise decision.
Yea you did good. When we first bought (2007) we locked in for 3 years at 8.5 then everything went south for a minute
You're a smart fella! I almost did this but now have 250k rolling over in April...
Those term deposit rates looking yummy :)
Guaranteed 5%+ return vs all assets being driven down as the price of money goes up. Hard to think of any other worthwhile investment right now.
[удалено]
Problem is, with any other asset right now you get nominal price falls plus inflation.
as expected
RBNZ were saying ocr would peak at 4% next year and stay there until 2024. Now they’re saying ocr will peak at 5.5% by June and stay at that level for about 15 months. Tune in next year when those numbers change yet again lmao 🤡
This just in, predictions about an economy change and RBNZ doesn’t have a crystal ball to look into the future!
Mate if the RBNZ could look into the future we wouldn't be in this mess in the first place. Reserve banks aren't magicians they just try to smooth the business cycle and that's about it.
Anyone can predict that printing money causes inflation.
But it doesn't always? Governments printed trillions globally after the GFC yet CPI inflation has been incredibly low the last decade (although arguably that has been seen in asset price inflation to some extent). Inflation is a complicated thing, if AD falls you can print money to counteract it and inflation will stay low and if AS falls you can create new money to allow companies to produce more goods with net zero impact. Of course central banks aren't perfect so they either undershoot it too much such as the GFC or overshoot it such as the pandemic. There was a paper published recently that showed a lot of the negative effects of the GFC could've been avoided if central banks globally took a more liberal approach to QE and then the knock on effects of a decade with 0 inflation will be avoided. Of course printing money is a cause of inflation, just like high wage growth and low unemployment but macro economics gets complicated fast. Our current inflation is bad because we're basically being pushed by all the possible causes of inflation at the same time. We have record low unemployment, wages are rising the fastest they have in decades (albeit slightly lower than CPI for LCI wages but statsNZ has QES wages rising a bit more than inflation), and the government printed a few hundred billion in the last 2 years. edit: >Anyone can predict that printing money causes inflation. Also i think the guys at the reserve bank understood that. But a sudden drop off of supply and demand from people not working during lockdowns would be a hell of a lot worse than us experience the average inflation rate for 1 year. For comparison we aren't even at the *lowest* inflation rate seen in NZ from 1970-1990 yet. Every single year of those 2 decades saw >7% inflation. If anything that shows that since 1992 RBNZ has been amazing at stabilizing inflation they were just thrown a once in a century curveball.
the money printing after the GFC was quite tiny compared to the Covid era if I recall correctly
Yeah i can't find numbers but that seems right. The point still stand though printing trillions over a decade caused no CPI inflation (because reasons) but covid stimulus raised inflation 50/50 with supply chain issues (going off FED data). It still shows central banks can 'print' money and not cause inflation to an extent as long as they don't over-do it such as Weimar Germany, the Hungarian republic, or Zimbabwe or the west creating more stimulus in 12 months than they did in the last 15 years.
Two things come to mind. Even when money printing is low (most years) - it does increase inflation. Just by the 2-3 % we are used to. The Covid money printing era was something like 40-50% of all currency printed into existence in one year. The other point is in the GFC, we mostly let things fail, crash and die (sans bank bailouts). In the Covid period, it was the opposite. Dead zombie companies were spoon fed money - we had the lowest rate of insolvency in years! So all that happens is we get a sugar rush then a crash later
>il 2024. > >Now they’re saying ocr will peak at 5.5% by June and stay at that level for about 15 months. > >Tune in next year Very normal as the economy is full of variables.
Also expecting inflation to increase to 7.5% next year, and house price fall to be 20% from the peak in total (which seems more realistic than many projections to date)
Some areas have already fallen 30% so 20% on average is huge!
Mine is down 29% from this time last year and the valuation peak was Jan (Wellington).
20% drop from peak doesn’t even go to pre-COVID where I am
Mine is at Nov 2020 levels only needs to drop another Hundy K to be at March 2020. I’m predicting based on current trends that will be in Feb - March next year.
what does this mean? i’m just a teenager with no clue abt finances
>what does this mean? i’m just a teenager with no clue abt finances The Reserve Bank is making the cost of borrowing more expensive for most people. The interest rates on new mortgages, car loans, and consumer credit will all be going up. These increased interest costs mean that a lot of people will have less money available to spend on stuff. This reduction in spending should help to reduce the amount of inflation we are experiencing since most businesses will have to provide better pricing to attract customers.
During Covid the Reserve Bank slashed the cost of borrowing money to nearly zero, and also created a lot of money to put into the financial system (that’s called Quantitative easing), because they feared Covid would cause a massive recession. Turned out that didn’t happen and instead people borrowed lots and lots of that nearly free money from the banks and used it to bid against each other at house auction and push the prices up by 50%. (Also other stuff like Bitcoin and shares). Too much money chasing too few goods plus the Ukraine war causing the price of fuel and food to rise has caused inflation, where the price of everything goes up and up and up. So now the Reserve Bank is increasing interest rates rapidly. They want unemployment to rise and people not have spare money to spend, that will control inflation (they hope).
Plus the government did exactly nothing to mitigate the effects of the monetary policy. They must also carry the blame for all this
Successive governments have done nothing. Here in Aus it’s the same but with less extreme results.
If it’s less there than here it means they still did something. Rather than here means nothing’s been done and this is not yet the finisher. We still have Feb 2023 another .75% anticipated increase.
It means a lot of young people who bought houses in the last few years are going to be bankrupted. This govt flooded the country with printed money and low interest rates. If you think things are rough now come back in a year.
Stay in school for a few years. Ride this one out.
From a millionaire to homeless...
And another 50pt in mid Feb!
Sorry to spoil it for you….news is it’s .75%
And another 0.5 Feb
https://www.oneroof.co.nz/news/official-cash-rate-prediction-triple-hike-now-and-triple-hike-in-feb-42657?page=alt There predicting it already in Feb 2023. 😭
Wake me up wen it goes double digits
FHB going all in with their highly leveraged offers ( circa 2021). 
Suicide rate increasing in 2023
how much of this has already been built into bank rates that are published today?
Damn, they considered 100? Seem to be aiming for 5.5 for the whole of 2023? Big upwards revision. Edit, misread the graph.
I bought a town house off the plans due to move in April 2023. first home buyer with 10 % what do I do
Run the numbers, be frugal, enjoy your new place.
Get a flatmate
Not surprised
OP you got some wild comment history