[bob_the_engineer]

Well I had to renew the house mortgage and thought I’d share the experience.

The biggest surprise was that I can actually get the bank to change the Mortgage rate easily, by simply pointing out a better deal that I could take (many many thanks to the forum members for pointing that one out to me!)

The other thing is I began to ask myself just how much the banks make out of giving me the loan, I thought if I knew this then I would be better informed as to just how much I could get them to move the rate by.

This may be utter nonsense, but its how I think about it.

There is this big giant magic bank, the bank that only other banks are allowed to use. This bank is called the reserve bank and it sets its interest rates in an attempt to benefit the NZ economy. Doing this lets it influence domestic spending, house prices and the international exchange rates, which of course effects exports and imports as well as inflation. It’s a rather evil institution because it can strip cash out of most households very effectively by changing the OCR.

The OCR is the official cash rate, it’s simply the interest rate set by the reserve bank. They current have it set at 7.25% and that actually means that any bank can give them cash and they will pay 7.0 % interest (OCR – 0.25%). Furthermore any bank can borrow an UNLIMITED amount of cash and pay 7.5% interest to the reserve bank (OCR+0.25%)

Funny really the reserve bank can take your money, leave you feeling poor, this slows down inflation, then we pat the government on the back for controlling inflation (and taking all our cash). No I’m sure it’s more complicated than this, this is simply my point of view when renewing my loan!

Anyway the way I came to think about it is this, any bank can borrow any amount at the OCR + 0.25% rate, then they loan it to you. Any difference between the OCR+0.25% is the bank fee.

:uhoh OMG I get duller by the day, ha if you read all that and thought it was interesting then you have to come with me and sit in the dull people room, I will be serving tea and plain digestive biscuits, and thoroughly enjoying myself. Where did I put my cardi

Bob

[Avalon]

Ok, you had better put the kettle on :laugh Cos not only did I actually understand that - i thought it was an excelllent way of explaining it!

ANd to prove just how dull I can be - I always thought of it in terms of the difference between what the bank pays you in interst to borrow money off you (when you put savings in the bank) and what they charge you to borrow on the mortgae or credit cards.

Which Is why I get hacked off with them saying the need to charge me fees ON TOP of that!

Magic bank - Love it!

I think though you can push the boat out a bit and serve chocolate digestives. :laugh

[zardell]

Move over H and Bob, make mine a tea - no sugar.

Thats the first time I have ever understood how banks work and NOT pulled my hair out at the same time.

Now....wheres my knitting ...........?

Julie

x

[Charlosparky]

Well I had to renew the house mortgage and thought I’d share the experience.

The biggest surprise was that I can actually get the bank to change the Mortgage rate easily, by simply pointing out a better deal that I could take (many many thanks to the forum members for pointing that one out to me!)

The other thing is I began to ask myself just how much the banks make out of giving me the loan, I thought if I knew this then I would be better informed as to just how much I could get them to move the rate by.

This may be utter nonsense, but its how I think about it.

There is this big giant magic bank, the bank that only other banks are allowed to use. This bank is called the reserve bank and it sets its interest rates in an attempt to benefit the NZ economy. Doing this lets it influence domestic spending, house prices and the international exchange rates, which of course effects exports and imports as well as inflation. It’s a rather evil institution because it can strip cash out of most households very effectively by changing the OCR.

The OCR is the official cash rate, it’s simply the interest rate set by the reserve bank. They current have it set at 7.25% and that actually means that any bank can give them cash and they will pay 7.0 % interest (OCR – 0.25%). Furthermore any bank can borrow an UNLIMITED amount of cash and pay 7.5% interest to the reserve bank (OCR+0.25%)

Funny really the reserve bank can take your money, leave you feeling poor, this slows down inflation, then we pat the government on the back for controlling inflation (and taking all our cash). No I’m sure it’s more complicated than this, this is simply my point of view when renewing my loan!

Anyway the way I came to think about it is this, any bank can borrow any amount at the OCR + 0.25% rate, then they loan it to you. Any difference between the OCR+0.25% is the bank fee.

:uhoh OMG I get duller by the day, ha if you read all that and thought it was interesting then you have to come with me and sit in the dull people room, I will be serving tea and plain digestive biscuits, and thoroughly enjoying myself. Where did I put my cardi

Bob
:confused: :confused: :confused:
Lost me there. I will take off my Nikes and football shirt and replace them with slippers and cardy, and then read it over again slowly.

[Smiler]

Thanks Bob! Great way of explaining it, for once I understood it all and it's filed away for use WHEN we get to haggle over mortgages.

This rooms not crowded is it?

Pass the biccies someone please? :laugh Anyone object if I dunk mine?

[bob_the_engineer]

:laugh Thanks so much.

I’m no longer sat all on my lonesome, I’ll go get the choci biscuits out and we can have a proper party. :raebanana


Bob

[Smiler]

:nice1

[jaycee]

Bob, I'm a little late to this party (story of my life), but is there still some tea in that pot? :)

Some time ago I asked on here about renewing mortgages, but you're the only person who's mentioned actually doing it, so can I pick your brains?

Did the bank give you any kind of notice that you needed to renew? Did you stay with the same lender, and if so what was involved in the process?

I'm still in the UK, so for the sake of simplicity I'm thinking of fixing a new rate with the same bank (ASB), but if they're going to want all the paperwork again it may be worth shopping around. Then again, I'm wondering if I could use my existing valued customer status ( :) ) to negotiate? Is that what you did?

[StevieD]

Bob, you have actually put into simple terms the way the capitalist system runs! When I did economics it sickened me the way the interest rates were used to control the supply of money, and how we spent our hard earned cash. Like most things, the economy is used to control the masses.

The biggest mistake anybody ever did was give power to the companies to pay wages directly into the bank. Result, whole wage departments slashed overnight. It gave the banks too much control over the money supply, the chance to make astronomical sums of money with OUR wages, and more importantly, control over us. Bob, milk no sugar and better lay off the biccies...

[Avalon]

The biggest mistake anybody ever did was give power to the companies to pay wages directly into the bank. Result, whole wage departments slashed overnight. It gave the banks too much control over the money supply, the chance to make astronomical sums of money with OUR wages, and more importantly, control over us. Bob, milk no sugar and better lay off the biccies...
Stevie -

could you explain that a bit slower please? Becasue I not sure ive quite understood what you mean.

Actually - i think I might - but would you mind spelling it out. Im fascinated by this stuff - but it takes me while to get it :o

[Moorf]

Jaycee - we recently renewed our mortgage and fixed a new rate for 6 months. We received a note in the mail that our previous fixed mortgage was due to end - gave 28 days notice - and asked if we wanted an appt to discus our options. We're with National Bank. Woz went in and changed it all in his lunch break and bought home docs for me to sign.. sorted.

[jaycee]

Thanks Moorf :) Sounds like it might be do-able by phone/fax.