Rants, Raves, Reviews


My God 8%!

By Gary R, in , posted: 7-Jun-2007 09:13

Wow and most economists didn't think the Reserve Bank would do it again but here we go. This will push floating rates well over 10% and it could definitely be the tipping point needed to slow up the housing market but then again consumers have shown quite a defiance when it comes to curbing spending habits. If you consider the technology products we all love to buy the prices are getting better and better with the exchange rate at 25 year highs. Yesterday the USD tipped over .75 which is huge. At this rate and with tech so cheap why wouldn't you buy?

We are now on our third OCR rise this year and there doesn't appear to be any end in sight. Expect to see more exporters and manufacturers shutting shop and moving production off shore. The labour market is tight but sooner or later something needs to give.

Personally I am so glad I fixed my mortgage rates for such a long time that Labour will be a distant memory by the time I need to re-fix. Hopefully the next government will have some more creative ideas for inflation control rather than continually battering home and business owners.


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Comment by sbiddle, on 7-Jun-2007 10:00

Roll on 2008 and a National Government.

I'm picking October or November for the big crash to start with inflation breaking the 3% barrier and the house market crashing.


Comment by juha, on 7-Jun-2007 11:52

They've been at 10.05% already... how much more? 10.5%? 11%? Where's the pain threshold? 14-15%


Comment by sbiddle, on 7-Jun-2007 13:45


Where's the pain threshold? 14-15%


The NZ property market was booming in the mid 80's with 18% inflation.


Comment by sbiddle, on 7-Jun-2007 13:45

Oops mean mortgage rates at 18%


Comment by kent, on 8-Jun-2007 11:06

Trouble is by tickling out increases people get used to it and decide they can stretch things that little bit more. He really should have wacked them up 3% a couple of years ago. Then it would be felt more and have greater impact.


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Gary R
Wellington
New Zealand


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