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# 180474 10-Sep-2015 10:18
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Why did the USD just drop 1 cent after steadily increasing over the last few days?

Everyone in the world knew the OCR was going to get cut again today. Most of the major banks had already priced in the cut to their advertised rates...




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  # 1384820 10-Sep-2015 10:31
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We all know currency market and shares don't actually abide by any form of logic.


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  # 1384826 10-Sep-2015 10:40
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Until it was done it was just an educated guess.





 
 
 
 


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  # 1384860 10-Sep-2015 11:04
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The more important news than the OCR drop from 3 to 2.75%, was the monetary policy statement indicating that further drop in the OCR from 2.75 to 2.5% may be expected in October.

Things are kind of tricky at the moment.  Interest rates are low, inflation is low.  The fall in the NZD should translate to increased (imported) inflation.  I'm suspicious that if it wasn't for the fall in the NZD, then we'd probably have negative inflation now.  That might sound great (stuff getting cheaper - woohoo) except that for non-essential items/consumables, you'd be nuts to buy something today when you can buy it cheaper tomorrow.  Call it human nature perhaps, though people do get hyped up in good times and do dumb things like buying new cars that they want but don't need - often borrowing money to buy depreciating assets.  I don't think many people would be so happy if that was the situation with your house.

That's pretty much what you're going to see in the other "big issue" RBNZ keeps talking about - the Auckland housing bubble.  Optimists like to talk about supply/demand to deny what's looking like is inevitable.  Regardless of supposed demographics I think it's going to collapse. I'm just not sure what the trigger for that collapse will be, but apparently not the traditional one - interest rate hikes.




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  # 1384867 10-Sep-2015 11:11
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dropping OCR = dropping economy

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  # 1384873 10-Sep-2015 11:17
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David Lange correctly described the behavior of the financial markets as being like "demented reef fish". 




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  # 1384882 10-Sep-2015 11:25
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Glad I broke out of my fixed term mortgages last week before it dropped. Cost me a months payments or a bit more, but pretty sure if I wait until later this year or early next year I'll fix at 2% lower than I was before. That will save some money.

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  # 1384898 10-Sep-2015 11:32
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timmmay: Glad I broke out of my fixed term mortgages last week before it dropped. Cost me a months payments or a bit more, but pretty sure if I wait until later this year or early next year I'll fix at 2% lower than I was before. That will save some money.


Similarly, I broke out of one of my fixed mortgages only yesterday afternoon, so probably good timing. Only cost $68 in break fees as only fixed at 5.5, but still re-fixing it will still be probably .7 lower so a no-brainer. There was a cost of $2k for breaking the other one (fixed at 6.5), which is just a too high an up-front cost to do at this time.

Still waiting for my bank (Kiwibank) to match/better some of those new lower longer-term rates before fixing the two mortgages we now have floating - they said they'll be releasing new rates on Monday...

 
 
 
 


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  # 1384902 10-Sep-2015 11:37
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I'm just going to take home loan. How do you think is 16 of Sept will be enough time for banks to reflect OCR drop on Fixed Rates?

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  # 1384907 10-Sep-2015 11:46
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solival: I'm just going to take home loan. How do you think is 16 of Sept will be enough time for banks to reflect OCR drop on Fixed Rates?


I wonder if some of those new 'record low' rates (eg 1 year at 4.35 from the BNZ) have already factored today's drop, given it's been regarded as a well-nigh certainty. As mentioned, Kiwibank apparently will release new rates on Monday (14th), and I'd imagine other banks will be around the same time (if not earlier?).

If you're about to take out a loan on or about the 16th, wouldn't you already have the finance lined up? If so, perhaps you could ask your bank when they will make an announcement of any new rates.

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  # 1384909 10-Sep-2015 11:47
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BNZ have now Fixed Rates lock on 4 years minimum.

Added: At least in my case. Previously they offered 2 or 3 years Rate Lock, now only 4.

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  # 1384924 10-Sep-2015 12:25
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Unfortunately the market still believes that the Fed will increase interest rates but the reality is that there isn't enough inflation, wage growth is stagnant and there is still large amounts of debt and asset bubbles which need deflating in a manageable way. I'm sure once the Fed comes out and clarifies the fact that there isn't going to be any interest rate increases any time soon you'll see money being pulled out of the US looking for higher yields.




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  # 1384978 10-Sep-2015 13:45
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Shame we do not have Tracker Mortgages here.







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  # 1385289 10-Sep-2015 22:43
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That's basically what a floating rate is meant to be, the banks are just rubbish at passing on the savings.

re the break fee if you're better off breaking, the fee just gets added to the balance it's not like you need to dig into your pocket and give the bank the cash for the break fee...




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  # 1385298 10-Sep-2015 22:53
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mentalinc: ... re the break fee if you're better off breaking, the fee just gets added to the balance it's not like you need to dig into your pocket and give the bank the cash for the break fee ...


... and then you pay them interest on the break fee ...  undecided




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  # 1385312 10-Sep-2015 23:39
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USD drop 1c? so now it's the US99c?




Involuntary autocorrect in operation on mobile device. Apologies in advance.


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