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Money Attitudes and Beliefs

Many beliefs and attitudes were developed when people were very young. They watch and learn lessons from parents, other family members, friends and teachers.

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Many beliefs and attitudes were developed when people were very young. They watch and learn lessons from parents, other family members, friends and teachers. Usually, people don’t realise what they’ve picked up along the way and, unknowingly, other’s beliefs and experience begin to become one’s own.

While money management skills can be quite easily leant, attitudes and behaviours are often more difficult to tackle. They can result from deeply ingrained beliefs or experiences. It’s important to realise what beliefs one has about money so one can establish which beliefs need changing.
Money Fantasies

Many people will have some kind of fantasy about money lurking in their subconscious. A person’s brain can trick them into believing these fantasies could actually happen. However if one really thought about it , it would become clear just how silly they really are. Do any of these sound familiar?

  • Lottery Living: Actually believing you might nab a winning ticket, and believing this every week.
  • Marry a Millionaire: And that single-minded focus keeps a person both single AND broke. A spouse is not a financial plan.
  • Waiting for a Windfall: Miscellaneous hopes for an inheritance, a bank error in one’s favour, a pot of gold in the back of the garage, etc.
  • Thinking someone is going to pay a wage that’s waaaaay more than they should, enabling one to retire in two years.
  • Sudden Success: Sell that screenplay or invent a new kind of peanut butter which will make one into a gazillionaire.
  • Do What You Love, The Money Will Follow: The title of an actual book that has created financial disaster for everyone who followed its precepts.
  • Ignorance Is Profitable: The crack-based notion that by not paying attention to your money . . . one day you’ll wake up RICH!
  • Things Have a Way of Working Out: When clearly they don’t if you don’t do anything about it.
  • I’ll Do It Later: Time has an uncanny ability of disappearing and you wake up 30 years later still chanting to yourself you have plenty of time and will do it later.
  • Money is not everything. Right! Try living without it for a month.
  • Denial. I am not that out of shape

Now at this point readers are probably laughing. But, if you think about it, at some point in time, at least one of these thoughts has gone through your head, or you’ve heard someone else say them. Sometimes people make these comments in jest to either themselves or others, but it could be just what’s really going on in their head.

The most important point is that every person is responsible for their own beliefs about money and every person has the power to change these beliefs.

Accounting & Finance

Low Interest Rates Winners and Losers

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Lower mortgage interest rates is a big deal for most homeowners and buyers.

Existing homeowners can hunt around for a better deal with the same or another lender and in the process save hundreds, if not thousands of dollars on interest payments. Even if a borrower is locked into a fixed rate deal on a fixed term, it often pays to break it and reap the rewards of paying a lot less interest.

For first time home buyers, lower interest rates can be the difference between renting and owning a home. Existing homeowners trading up or down, see lower interest rates as a great time to sell and buy too, Therefore there is always a frenzy of activity in the mortgages sector when there is movement in interest rates and there will be winners and and there will be losers.

Winners and Losers

Lower interest rates sends a signal to vendors with homes to sell, that there are more buyers in the market. This can get unsold properties sold which is a win win for vendor and buyer.

More buyers in the market, however can also push the sales price up, as vendors aim to get the best price and there can be only one buyer, the one who is willing and able to pay the most.

In this situation it’s more of a win for the vendor. The eventual purchaser is likely to have paid more than they were comfortable with and thus borrowed more to get the property. Plus there were many buyers locked out by the higher price.

First Home Buyer Tip

The tip for first home buyers is to always be ready to take action as soon as the timing is right.

For first home buyers, it’s always a good time keep a financial advisor or broker up to speed on your personal financial position. This way when the timing is right, like a downward move in interest rates, you can just ask the question:

“What can I afford to borrow, now the interest rates are lower?”

There is no such thing as one size fits all when it comes to borrowing money. Your position will determine how high risk you are to a lender.

A trusted advisor in the know, can act fast on your behalf when lending conditions favour you. Lenders who see you a good ‘investment’ will be keen to move quickly too, to secure your business and thus beat their competition, i.e. other lenders.

Recent news of an OCR rate drop by the RBNZ, spread like wildfire around the country and the early worm is sure to get the best deals.

Homeowners with advisors already up to speed on their current position, will be busy acting on their behalf, to find the best deal saving their clients hundreds if not thousands in interest repayments over the term of their loan.

Property price increases have cooled in Auckland, increasing by just 1.7 percent compared to the previous year. Listings too have been lower, however that’s all about to change. More buyers, trigger more listings and with more buying power, higher property prices.

Timing is everything, so whatever your circumstance, talk to your mortgage advisor and act on the deal that’s right for you.

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Accounting & Finance

Property Listings Drought Adds Fuel To Fire

A property listings drought is adding further fuel to our over-heated property market. Property prices are increasing everywhere except Taranaki according to Trade Me Sales Price Index and that’s got the RBNZ considering further action to curb demand.

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A property listings drought is adding further fuel to our over-heated property market.  Property prices are increasing everywhere except Taranaki according to Trade Me Sales Price Index and that’s got the RBNZ considering further action to curb demand.

The RBNZ’s LVR restriction on Auckland property investors has done little to dampen their appetite and many have also moved their focus to other areas where property prices have been on the increase since October 2015.

The listings drought suggests most home owners are electing to improve their properties using the equity in their homes over moving house.  Some Aucklanders have chosen to leave the city for change of lifestyle and Tauranga has been one of the main benefactors as well as the region of Hawkes Bay.

Curbing demand is how the RBNZ want to deal with the property market and they’re considering a variety of measures.  Bernard Hickey in a news item on NZHerald believes we’ll know more on the RBNZ’s next move  in the second half of 2016.  Bernard mentions two dates in particular: 19 August is the deadline for Auckland  Council to accept all or some or reject all the Unitary Plan.  The Government is hinting at wading in if the Unitary Plan does not meet their goals of an Auckland growing up and out to meet new housing supply targets.

The other date to watch out for is 30 November.  On this day the RBNZ presents it’s Financial Stability Report.  One of the measures under consideration by the RBNZ is the fixing of the income to loan ratio.

From the news item on NZHerald

“The Reserve Bank helpfully included a chart in this week’s report that showed around 35 per cent of owner-occupiers and 60 per cent of investors had borrowed more than 5 times their income.”

New rules are coming and if what’s happened to date is anything to go by the RBNZ is not shy at taking action so keep these dates in your diary.  No doubt investors are now very aware of their income to lending ratio and will be taken the necessary steps to survive the next round of RBNZ restrictions.


This blog article was written for PropertyBlogs by Mobilize Mail.

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Accounting & Finance

How Low Can Mortgage Rates Go?

News of lower wholesale interest rates suggests we may be in for another round of super low home loan interest rates as early as next week. A news item on interest.co.nz provides examples of the correlation between swap rates and the mortgage rates with one example being SBS Bank’s one year rate as it was back in November 2015.

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News of lower wholesale interest rates suggests we may be in for another round of super low home loan interest rates as early as next week.   A news item on interest.co.nz provides examples of the correlation between swap rates and the mortgage rates with one example being SBS Bank’s one year rate as it was back in November 2015.  At the time their rate was big news as it was the lowest at 3.99% while the one year swap rate was at 2.72%.

Fast forward to February 2016 and SBS Bank’s one year rate is at 4.35% while the one year swap rate is currently lower than it was back in November, its currently 2.58%.  A downwards move is predicted and SBS Bank could move back to where it was in November 2015 at 3.99% or go even lower.

It really just takes one lender to make a move and the other lenders are sure to follow.  Borrowers in the know are regularly speaking to their mortgage broker to keep up to speed on the best deals and terms on offer.

So how low can mortgage rates go?  Possibly lower than they were in 2015.


This blog article was written for PropertyBlogs by Mobilize Mail.

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