The Fall and Fall Of Interest Rates

The headlines tell it all, even if the words are some what overstated. Readers will no doubt recall that for years there has been a steady drum beat emanating from the Reserve Bank, and almost every economist that interest rates would rise.  “Fix now ” was the advice given “before rates go up”.  I recommended to remain floating and those who heeded my advice will be doing much better because of it. And I don’t think this is the end if it yet . I expect rates to go lower still and stay low for a long time yet. One side effect may see people abandoning term deposits and seeking property as an alternative investment.

It’s going to get very interesting in the months and years ahead.

Banks go to war on mortgages
By Nicholas Jones | NZ Herald | Thursday May 31, 2012

Cheryl and William Chong negotiated two reductions in the interest rate on their ASB mortgage.
Mortgage rates have hit rock bottom as banks offer thousands of dollars in cash and slash advertised interest rates in response to pressure from home-buyers for deals.
A mortgage broker has described the market as “frantic” and “the best it’s ever going to get” after negotiating rates as low as 4.75 per cent for clients.
Banks are cutting each other’s lunch. They are incredibly good rates … but these kinds of deals are not sustainable the more people jump on the bus.”

Read more:
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10809729

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