April 05, 2005

• If you are almost positive that rates are going to increase, snag the 7.5% now. That's what I would do. It's a good rate either way, and even if the rates do for some reason happen to dip lower than that by June, it certainly won't be much lower.
• All indicators point to rates going up for the forseeable future. However, before locking in with your bank, shop around for lower interest rates. However however, if you just want to get it over with, 7.5% ain't bad.
• In NZ right now, 7.5% is good. It's with our current bank which is very competitive. We (#2 and I) talked about it last night and couldn't decide whether it's worth the risk, but I'm guessing it will be. We're being very cautious because we're still learning about the whole mortgage thing - we only bought two years ago - so advice from more experienced/money savvy monkeys is appreciated. Mostly I want to know if there's any reasons not to, I guess. Do banks allow that sort of flexibility in general with switching to a new term early?
• If you're looking at a mortgage in the range of $200,000, what you'd be doing, basically, is spending about $330 betting that it will go up a quarter point, whereas you'll save about $500 if it does. You should be able to work it out here.
• I'm not a mortgage banker, but I do write newsletters for quite a few of them. If all indicators point to the rates rising in NZ, there is NO reason whatsoever NOT to lock in right now. But creamy is right: shop around. From what I know, most banks here in the U.S. do allow that flexibility if you switch early, but a few don't.
• And I have a few mortgage banker connections who can steer you in the right (translation: no bullshit) direction, if you'd like, but then again, they're here in the U.S.
• Ick. Grown-up stuff blows dead bear.
• Interest rates will probably continue up for a while, they're way too low right now though not as crazy-low as a few years ago. Have you thought about locking in something more long term? Like getting a twenty or thirty year fixed? That way you don't run the risk of 9% being a good deal in two years, then 11% being good in another two years. She says wishing she had locked in 4-something% years ago... Especially on that condo she passed on, the one that doubled in value in three years for some completely unknown reason.
• Props to Name That Itch for the mental image.
• If NZ is anything like the US, rates are only going up from here on for quite some time. An ARM is a losing bet Stateside. Only those who aren't planning to stay in their homes for very long are getting ARMs around here.
• The prevailing wisdom seems to be that rates will increase. But the confidence behind interest rate predictions is mostly unjustified. Rates could just as easily fall if we experience another economic downturn. I think it makes more sense to base your decision on how much uncertainty your finances can handle. I like to use scenario planning. e.g. Will an increase in rates mean that you're going to have some difficulty with cash flow? If so then a lock-in of existing rates would be advisable. If it makes you feel any better, locking in the best rate is as tricky as trying to buy a stock at its all-time low. Nice if you can do it but don't build your financial plan assuming it'll happen.
• Keep in mind that NZ rates are not like US rates. As shown here, rates have fluctuated, but are at 5 year highs. I'd definitely say to any US borrowers to lock in your rate now for the long term, but for NZ it may be wise to take the bank's offer now and see what happens in 2 years. If it looks like rates will seriously start to increase, you can likely refinance into a fixed rate mortgage before rates get outrageous. Also keep in mind that, relative to the Official Cash Rate, (which appears to be similar to the US's Discount Rate,) your bank is offering some pretty generous terms. Less than 1% over the bank rate is usually a good deal.
• Just want to chime in as another "give me your good mortgage advice" 1st time mortage monkey - as of 31st March, I'm the proud owner of a hefty mortgage *whimper* Got a good deal at 6.65% fixed for 3yrs though. Tips?
• Okay, I'm rocking a 6.875% on a 171K loan, and it's pretty alright... but I would NEVER EVER EVER do that ARM foolishness. I mentioned it to my aunt, and she gave me one of those: "I'll disown you if you do the ARM." Faced with the possibility of being out some good Christmas presents and a nice place to stay when I visited Middle Tennessee, I followed her advice. And, currently, seeing as how retardo the housing market is going, I'm glad I stayed with fixed.
• Yeah, we're not going to switch to variable-rate. Basically in NZ the price of housing has gone way up, so the Reserve Bank are raising interest rates to bring the prices back down. So it's pretty much a given that they will go up, the question is when and how much. I guess the consensus is that it's a bit of a gamble. #2 has had a look at the comments and links posted here, too, and I think we'll wind up switching early if the bank will let us. Thanks for all the help. nonbinary, a twenty-thirty year fixed?! Wow. That's serious commitment.
• That's serious commitment. Dude, you like signed on for the rest of your life twice already.
• Pfft, I can get out any time I like. Right?
• snicker I'm happy living in this old septic tank in't middle of rubbish tip.
• 15 or 30 year mortgages are pretty much the norm in the States.
• Septic tank...I dream of living in a septic tank. I live inside a dead marsh warbler up Ayn Rands arse, and I still pay 10.73% p.a. fixed rate.
• If you plan to live in that house 'till the babies leave home, get a long term fixed rate mtg. If you are wishing to sell and move up within 5 years, then take the lower rate and shorter fixed period loan. If you have a choice between 15 and 30 year amortization (today's big word), and you can afford the 15 year payments, take that term. Otherwise, take the 30 year and make plans to pay down the principal when you can. I assume that these US type options have some meaning in NZ. I am a former loan officer, and I can tell you that short term fixed is good for the bank and bad for you.
• I refinanced a couple of years ago to a 30 year fixed 5.75%. I have too much to worry about without sweating over the interest rate.
• I honestly don't know if a fixed term that long is even available in NZ. I presume so, although I don't know of anyone that uses it. The stability must be nice, especially if you can get it super-low. The big hassle right now is calculating payments and how much to bump them up and whether we should just extend the mortgage and blahblahblah. (I don't know about #2, but I want to build our own house in another five years or so. Our house is okay for now, but it'll definitely be too small for two school-age kids. So I guess we're thinking in the short-ish term. That or kicking the kids out/sending them out to work as chimneysweeps.)
• Jaypro thanks for that link to the NZ interest rates. Slightly off topic but i'm curious to know how does a Canadian go about getting a NZ bank account to take advantage of your (probably equally good) *deposit* rates?
• This kind of shit is why I'd rather rent.