# New Zealand bank rate to rise to 5.25% by 2015



## Just a Guy (Mar 27, 2012)

Well, I've discussed how this would destroy the real estate market as renewals come due...average Canadian mortgage is $350k, for each 1% raise in the interest rate, the mortgage payment will increase by $100/month for each 100k of mortgage, meaning that people will face a mortgage payment increase of about $1050/month upon renewal if Canada followed suit starting in 2015...

Scary, since most people felt this kind of a rise could never happen so quickly...

Now, Canada probably won't follow suit, but what other effects could we expect?


----------



## GoldStone (Mar 6, 2011)

Your thread title is pure sensationalism.

Here's a reality check:

New Zealand raises interest rates 



> New Zealand has become the first developed nation to lift interest rates since the US began tapering its asset purchase programme, responding to *a surge in economic growth driven by soaring dairy exports and a construction boom*.
> 
> ...
> 
> ...


The rate hike is modest. 0.25% to 2.75%. Will NZ rates rise to 5.75% by 2015? Maybe, maybe not. More importantly, how is it relevant here in Canada?

Do we experience a surge in economic growth driven by soaring dairy exports?

Do we have a boom in construction prompted by earthquake reconstruction?

Is our dollar trading near record highs against other currencies?


----------



## Just a Guy (Mar 27, 2012)

Sorry, I should have said they have announced plans to continue raising their rates to 5.25% by 2015.

Regardless, if Canada and the world were to follow suit, it would be a disaster in my opinion. I imagine people in New Zealand have bought houses at low interest rates and will also suffer a housing crash as renewals come in if they actually raise their rates. Many things are inter-related...it could be an interesting place to watch.

I also wonder why the planned increase was glossed over in most news reports...it's got way more impact than the .25% increase they implemented.


----------



## daddybigbucks (Jan 30, 2011)

I personally think Canada should raise interest rates.

The present system, rewards spenders and punishes savers.


----------



## birdman (Feb 12, 2013)

All the more reason borrowers should be cautious when getting a mortgage. Suggest they be sure to consider the matter of interest rate risk on their mortgage and to consider locking in some or all of their mortgage and/or be sure they can handles higher rates.


----------



## Jon_Snow (May 20, 2009)

Living here out west in the land of humongous mortgages and Canada's most indebted, I will be sitting in my paid for home watching it all with considerable interest. Garth Turner's gloating will be something to behold. Took him a while to be proved right, but I suspect very much his views on Canadians reliance on housing values will be vindicated.


----------



## Taraz (Nov 24, 2013)

It will be interesting to see what happens if there's a massive interest rate hike here. Personally, I don't think they'll hike it quickly and risk the shock to the economy. 

If they did hike it, there would be US style buying opportunities and lots of renters around. It would be nice to pick up some rental properties at pennies on the dollar... :chuncky:


----------



## Butters (Apr 20, 2012)

Raise the rates! People think debt is okay!


----------



## daddybigbucks (Jan 30, 2011)

Taraz said:


> It will be interesting to see what happens if there's a massive interest rate hike here. Personally, I don't think they'll hike it quickly and risk the shock to the economy.


I think they have to raise it quickly or there will be too much pressure to lower it again. kinda like pulling off a bandaid.
Interest rates should be around 7 to 9 percent. That would take a lot of people out of the stock market and into g.i.cs
Industry would slow and become leaner and stronger. 
If you don't think people can handle big change, go check out a past disaster area. People rebuild and get stronger.
Just like nature does with forest fires.
I really can't see any downside to raising interest rates.


----------



## emperor (Jul 24, 2011)

Finally, lets get rates back to 5%. I read a couple articles last week but I didn't really understand them. One was the USA was suing RBC and bank of Canada was looking into price fixing for interest rates. I read the articles but I never really understood what they were talking about.


----------



## james4beach (Nov 15, 2012)

Bank of Canada will not raise the overnight rate in Canada. The economy is very weak, continues to weaken, and raising the BoC rate would destroy the real estate market and therefore destroy the banks.

I seriously doubt the BoC is going to raise rates anytime soon, not by any meaningful amount.

I expect rate cuts. The economy is very weak


----------

