October 12, 2024 • 41 mins
This week the Reserve Bank of New Zealand dropped the Official Cash Rate by 50 basis points to 4.75%.
Also, the number of one person households have increased by 120,000 over the past decade, but less than 30% of new builds are one or two bedrooms.
Debbie Roberts is a financial adviser at Property Apprentice and she joins Tim Beveridge to discuss this and more.
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Speaker 1 (00:05):
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and eighty ten and eighty text nine nine two. And
(01:51):
my guest is she is a financial advisor at Property
Apprentice and her name is Debbie Roberts. And almost get
into the stage where we need an open production. People
will recognize your voice, Debbie, just about I want imagine
thank you.
Speaker 4 (02:03):
That's kind, but probably.
Speaker 2 (02:05):
How are you anyway?
Speaker 4 (02:06):
I'm good, I'm good.
Speaker 2 (02:08):
You've been keeping yourself out of mischief?
Speaker 3 (02:09):
Yes?
Speaker 4 (02:10):
Absolutely, things are certainly getting busy at the moment.
Speaker 2 (02:13):
Well, we're going to talk about the OCR because the
Reserve Bank has dropped the OCR by fifty basis points.
A lot of Now this is for you if you're listening.
How far do you want it, want it need it
to fall? And how fast should it fall? There's so
many I mean basically should it, could it? Or what
do you need it to fall? To the OCR Because
a lot of commentary I've seen is that we know
(02:37):
that Adrian Or he was. In fact, I think there
was a time, wasn't there, Debbie, when he was talking
about he might lower it next year, And of course
he didn't really realize to detrash the economy so effectively
exactly exactly.
Speaker 4 (02:50):
He was originally talking about not reducing it until maybe
middle of next year at one point. But I think,
you know, in my opinion, I think he raised it
too late and he's reduced it too late. He should
have started reducing ages ago. I think, yeah, there's a
lot of blood in the water at the moment.
Speaker 2 (03:09):
Actually, I'm glad to hear you use a dramatic expression
like that, because a lot of the time, the language
of economics denies the human suffering that goes on when
you raise an interest rate, and people if you have
to have a mortgage sale, that is a massive, massive
(03:30):
toll to take on any individual, and economists use the expression.
I think Adrian Or used it. I'm not going to
pick on him. He's using the language that he's accustomed to.
But you know, there's going to be a little bit
of pain that we might have. There might be a
bit more pain. It's not like someone just you know,
injects you with a little bit of pain for a
moment where you'll feel some temporary discomfort. It's going to
ruin lives.
Speaker 4 (03:51):
Yeah, absolutely, And I think potentially the biggest issue at
the moment is the pain that the economy is suffering.
You know, to be fair, with banks testing affordability at
much higher interest rates than they than are currently on offer.
That's prevented a lot of people from getting into mortgage
g sales. I mean, we saw a lot more mortgage
(04:12):
e sales in the Global financial crisis than we've seen
this time round because the banks are implementing those high
test rates, so they were stress testing everyone before they
even signed off the mortgage, which has helped.
Speaker 2 (04:25):
Is there also have banking practices in the last twenty
years or so changed a bit.
Speaker 4 (04:31):
So they've changed dramatically.
Speaker 2 (04:34):
Okay, good. I do remember the black and white section
of the property whatever it was that you'd read, and
that's the mortgage sales used to be quite thick, and
you just observe that there are fewer, so obviously the
banks are doing much more to try and protect the
interests of their borrowers.
Speaker 4 (04:52):
Well, I think ever since the Global Financial Crisis, to
be fair, all the rules around lending changed quite dramatically,
and then with the implementation of the Triple CFA, they
changed again. So the rules around a definitely starting to relax.
So getting lending is starting to get a little bit easier,
which is great. The difficulty at the moment, I think,
(05:14):
and this is one of the reasons that we're seeing
the ocr coming down, is because the economy is struggling,
you know, and when the economy struggles, people lose jobs,
businesses go into liquidation, you know. So we've essentially been
in an economic downturn. We've been in what's the word,
I'm looking for a recession for nearly three years. You know.
(05:36):
It's been brutal for a lot of people.
Speaker 2 (05:38):
So, by the way, just so if you have I mean,
because sometimes people digest their news infrequently. So the cash
rate has been reduced by fifty basis points to four
point seventy five percent. A question for you, and Debby's
going to give her view on what she understands it
maybe needs to happen, or what the banks also are
(05:59):
anticipating because they spend a lot of time thinking about
the stuff and trying to guess what Adriana was going
to do. But the question for you is on I
eight hundred eighty ten eighty was that enough? Or do
you think that adrian or needs to do more? Now?
So it's been chopped point five of a percent fifty
basis points? Always think basis points? Why do't they just
(06:20):
say half a percent? Anyway, that's the language of economists,
I guess, But do they need should it for? Should
it be cut further? And will it be cut further?
I eight hundred eighty ten eighty. You can give your
reckons on that, Debbie, What do you reckon?
Speaker 4 (06:35):
I reckon? So I reckon it absolutely needs to come
down further, and I think it needs to come down
hard and fast. So a lot of economists are expecting
at least a point five reduction in November. Whoa, I know,
but that's and that's what the financial markets are factoring
in as well. So at least a point five?
Speaker 2 (06:57):
Why why should it be another point five?
Speaker 4 (06:59):
And what what the economy's tanking?
Speaker 2 (07:01):
And what will that? How do? What are the economic
gears that get pulled when you drop the interest rate?
How does that play out? From your perspective?
Speaker 4 (07:10):
It gives people hope you know, is that just.
Speaker 2 (07:15):
All because the cost of investing in building and infrastructure
and everything, it just gets cheaper, and it means that
we can see more action and that feeds through the
rest of the economy and business and borrow cheaper and
all that.
Speaker 4 (07:27):
That's part of it. But I think probably, and I
could be wrong here. This is just my personal opinion,
but I think the reason that the ocr needs to
come down is to give mortgage owners, like people who've
got mortgages on their homes, give them some interest rate relief,
because then they're going to have more money to spend
in the economy. Because it's the businesses that haven't been
(07:48):
doing sales that have been struggling, like you know, think restaurants,
think luxury items, you know, clothes. People have been spending
less on clothes, they've been spending less on furniture, they've
been spending less on things that are seen to be
not necessarily seen uls but nice to have. So those
(08:08):
sort of companies in those industries have really done it tough.
Speaker 2 (08:12):
Because for somebody who's got a chunkyish sort of mortgage,
I don't know what the average mortgage borrowing would be
these days. But if you think of people in the
first ten years that they're borrowing, they could have you know,
I don't know, five hundred to a million dollars on
mortgage much money.
Speaker 4 (08:28):
Don't remember the average mortgage around I saw something just
a couple of days ago, about half of mate. It's
about four hundred and eighty thousand I think is the
average mortgage for a first home buyer.
Speaker 2 (08:39):
Because one percent on a half million dollar mortgage, that's
what's that year. Hundred bucks a week about that.
Speaker 4 (08:47):
So most people in New Zealand at the moment when
they're refixing their mortgages, they're either floating or just fixing
for six months. So that means and that's quite different
to the long term normal, like the long term Norman
New Zealand is twelve month fixed rates or two year
fixed rates. So that's changed. People are moving towards the
(09:08):
shorter term interest rates now because they know that interest
rates are on the way down. So you know, people
are they're not wanting to fix for longer term, which
I think is a smart decision because I do think
there is going to be some more reductions and interest rates.
Speaker 2 (09:22):
Well, does anyone think that they're I mean, all the
banks are trying to do with their longer term borrowing
is make it so attractive that people sign up for
maybe two or three or four years.
Speaker 4 (09:33):
The cheapest rates are the four and five year rates
at the moment.
Speaker 2 (09:36):
Which tells you where they think the interest rates are going,
which is down.
Speaker 4 (09:39):
Yeah, exactly, because they want you to fix for long
term so you don't refinance to another bank. What's in my.
Speaker 2 (09:46):
Opinion, actually, I guess that must be the only motivation, because, yeah,
why would they offer cheaper money. It's because they want
they want your business for longer.
Speaker 4 (09:53):
Yeah, and there's some banks that are offering cash backs
if you refinance to them, you know, so they're trying
to they're trying to get your money. They're trying to
get your business. So if they've locked you into a
longer term interest rate, you're less likely to refinance to
another bank because you have to pay break these And my.
Speaker 2 (10:10):
Producer Tire has told me that the average first home
buyer mortgage it's sort of thinking of people at first
home buyers, is five hundred and fifty four thousand dollars off.
What did you think it was?
Speaker 4 (10:21):
I thought it was about four eighty.
Speaker 2 (10:24):
Yeah, I think that's a pretty good guess. It was
in the vicinity of half a million.
Speaker 4 (10:28):
I've read a lot of articles this week and I'm
bit sleep deprived.
Speaker 2 (10:31):
The age you've been working hard that we want to know.
The average owner occupied mortgage is three hundred and nine
thousand dollars. So that's on average, which means there'll be
people who are a lot more than that. I mean,
there'll be people who have had comfortably not comfortably. But
if you're buying in a market like Auckland, and you've
got a reasonable disposable income where you want the house
you want, you might have a million dollar mortgage plus easily.
Speaker 4 (10:55):
She would think there's definitely people out there with that
sort of mortgage on their home. Whether that's a smart
decision or not is a different story.
Speaker 2 (11:02):
Yes, I know someone who works on the show who's
is probably wincing at those words.
Speaker 4 (11:07):
Actually, well, it depends on your financial position.
Speaker 2 (11:10):
Well, because just to paint, but to paint a picture
of it. What my memories deserted me on this. But
what were people borrowing at at its cheapest? Were there
something like two point nine to nine percent mortgages going
for a while?
Speaker 4 (11:23):
Yeah, so that was during COVID you know, during COVID,
the Reserve Bank slashed the OCR and at that point,
interest rates were two and a half three percent, you know,
two and a half to two point nine to nine percent.
So a lot of people fixed their mortgages for five
years on those cheap interest rates.
Speaker 2 (11:41):
Very good move, absolutely.
Speaker 4 (11:43):
And you know, some of them still haven't come off
those low interest rates. Most of them will have come
off those low interest rates before the next you know,
before the end of the next twelve months, but you know,
that's going to have quite an impact. I think the
important thing to remember is that the average long term
interest rate in New Zealand, excluding the period during COVID
(12:04):
when things were unusually low, the long term average interest
rates six point three five percent.
Speaker 2 (12:12):
So that also begs the question what is the sort
of optimum interest rate that we should expect or I mean,
because there's one thing to say, I want interest rates
to be four percent or something, but it's not really
going to happen realistically.
Speaker 4 (12:26):
It's not likely to get that. Like, I mean, interest
rates have been trending lower over the last decade or so,
so they have definitely been showing a downward trend. Why
is that just because I think central banks around the
world have been learning. You know, we haven't always had
a reserve bank in New Zealand that's controlled things with
the OCR in the eighties, did you didn't have twenty
(12:49):
percent plus? You know that was before the OCR. So
OCR has helped to control interest rates to a certain extent.
So yeah, it's not all bad.
Speaker 2 (12:58):
Yeah, okay, we want your calls. One hundred and eighty
ten eighties. The cash rate has been dropped by zero
point five percent forty basis points, as they like to say,
doesn't need to fall further. And if you want a
little a little bit more context, the interest rates being
offered by banks, the variables are around just under eight percent,
and if you want to go six months or a year,
(13:19):
it's around sort of six and a half ish percent,
depending on which what your bank is. Oh, actually that's
if you've got good equity, Either that or you're looking
at about seven percent for six months or a year.
It gets cheaper and cheaper and cheaper at the further
you go out. What do you think it should be?
What does it need to fall for you to be
able to actually start spending money on anything apart from
(13:40):
your mortgage and food. Oh, eight hundred eighty ten eighty
text nine two nine two. We'll be back in just
a moment. It's coming up to twenty one past four.
Speaker 5 (13:47):
News Talk said, b's never seems good.
Speaker 2 (14:06):
And welcome back to the one riffradio show on the
weekend Collective. I'm Ton Beverage. My guest is Debbie Roberts.
She's a financial advisor at Property Apprentice. DEBI if people
want to get in touch with Property Apprentice, it is
Property Apprentice dot co dot NZ. Correct with this relief. Now,
by the way, I have said some text people telling
me that my figures are on what the interest rates are. Look,
(14:27):
I'm scanning a page of about probably about it one hundred,
one hundred and fifty interest rates. And yes there are
some cheaper ones for five point seventy five percent or
five point sixty nine for two or three year mortgages. Yes,
that's right, but they also some of many of those
(14:47):
rates are if you've got decent equity. But there is
one I think the Asb's offering five point six nine
percent for two years. That's s actually not a bad deal,
is it, Debbie.
Speaker 4 (14:55):
Yep, there's some pretty good deals out there at the
moment for sure.
Speaker 2 (14:59):
So, yeah, what do you think should happen with the
OCI should it continue to fall? And we'll talk to
Debbi in just a moment about what she knows the
ban Thanks are planning on, because they'll be thinking ahead
on this one for sure. Aaron High, Hey, they have
a going good Hey.
Speaker 6 (15:16):
Yeah, I've got a mortgage bought two years two and
a half years ago now, and that was kind of
when the industrates are kind of starting to kind of
get up and say a little bit of those Midt
late fives, hot mid six, this kind of thing, And
I'm pretty happy with what I was playing. I split
(15:39):
my mortgage onto two different rates, and so I think
that's one thing that a lot of people don't know
that they can do, and I think sometimes some banks
don't often tell people that they can do, is even
splitting your mortgage rate, your mortgage amount into a couple
of amounts and then at least you can take the
benefit of long term on part of it, and then
(16:01):
you've got some on some on shore terms as well.
Speaker 4 (16:04):
Yeah, absolutely thinks of.
Speaker 6 (16:06):
His rate changes and things like that too.
Speaker 4 (16:08):
Really good strategy. And you know, I think I've read
an article recently that said that most New Zealanders don't
know that mortgage advisors are free to work with because
they get paid by the banks. So like, we've always
recommended that people work with a mortgage advisor because they
essentially work for you even though they get paid by
the banks. They work for you and your best interests,
(16:30):
and they've got access to over twenty lenders, you know,
so they can shop around, get the best deal for
you and help advise you on the structures.
Speaker 2 (16:39):
Feet Lane, did you get yours through mortgage advisor?
Speaker 6 (16:41):
Did you say, Aaron, Well, I had a friend of
mine who's a mortgage broker. Yes, but I've kind of
I already have. I had a house about fifteen years ago,
originally as my first house when I was about eighteen,
and I remember interest from its back then we're about
eight to eight seven eight. But I think people when
(17:03):
interest rates were really low, people are like, oh, yeah,
my borrowing power is this. I can spin up to
this not thinking a head, and I'm like, Okay, if
the interest rates are going to be at two percent, now,
what are they going to be in two or three
years when they come off the fixed rate? And then
this is why people freaked out when they were five
and six percent coming off their fixed rates, and they
(17:23):
were like, because they're over capitalized, over mortgaged.
Speaker 2 (17:28):
I'm glad you mentioned the more that we've talked about
the mortgage broker, because we used one when we first.
Because I work on a property show and I meet
a lot of people, somebody produced me. But I actually
wasn't going to initially because I was I don't know,
I just had this wasn't it in bills and built prejudice?
But I thought, what do I need to go to
(17:48):
mortgage advisor. I'll just go to the banks until somebody
gave me good advice and says no, they'll and they'll
also do the thinking for you on the way you
can structure the mortgage because they do it all the time.
And it was, yeah, and.
Speaker 4 (18:00):
All banks are different, you know, because it depends on
your individual situation, and you know, some banks are friendlier
than others if you're self employed, or if you earn
bonuses or commissions, and you know, there's so many different variables.
So if you go directly to a bank, they're only
going to tell you about their stuff. They're not going
to say they're not going to say, oh, we can't
give you lending, but if you go down the road
(18:21):
and see that bank, they'll approve it, whereas a mortgage
advisor can.
Speaker 6 (18:27):
Yeah, that was really handy with my broker. Was like
for me coming back into the property after about fifteen years,
I was as a first time buyer, so there was
the kind of work ins and outs of using kvsaver.
I couldn't use part of my kisaver, and they knew
banks that would potentially help with with the with the
(18:48):
income and all that kind of was that what do
you what.
Speaker 2 (18:51):
Do you think is going to happen? What do you
think is going to happen with the cash? Right? Do
you do you need it to for further for yourself
or do you want it to fall further? And do
you expect it to fall further?
Speaker 4 (19:02):
Yes.
Speaker 6 (19:02):
So, because I had my split rates, I had one
for one year and one for two years. So my
first year came off at the start of this year
was February, and I fixed. I ended up fixing that
for five years at five point nine percent, and so
my second part, my second half, comes off in February
next year. So I'm kind of hoping that dropped quite
(19:24):
a bit, so that my other half will get them
a slow rate.
Speaker 4 (19:29):
Actually, that's I think that's probably going to be quite
good timing if that's coming off in February, because I mean,
the financial markets are certainly factoring in big drops between
now and then.
Speaker 2 (19:39):
So yeah, good, thanks for call Aaron. Good on your mate. Yes, okay,
bye bye. Actually, how many ways can you put your
mortgage realistically? Because there would be people who for sure
have In fact, I would imagine that most people would
have a revolving aspect to their mortgage.
Speaker 4 (19:57):
Oh you might be surprised, I'd say most people don't.
Speaker 2 (20:01):
Isn't that funny because I just assumed that that you'd
have a revolving one that you would put everything into
to try and reduce whatever you had on that or
some aspects, even if it's ten twenty thirty thousand, so
it's like your living expenses. But if you can be frugal,
you can pay that off.
Speaker 4 (20:18):
Yeah, revolving credits and offset that wants are a great
way to pay your mortgage off faster. But you've got
to be pretty good with your money management. Not everyone is,
So if someone's not very good with budgeting, it'd be
a nightmare. Okay, And Also, it does affect how much
you can borrow because the offset loan and the involving
credit they're on a floating interest rate, so banks test
(20:40):
it differently, So it does affect how much you can borrow.
So if you're borrowing capacity is pretty limited, then the
mortgage advisor would probably suggest.
Speaker 2 (20:49):
Not just yet, how many ways can you how many
ways can you split the morghage? Could you go for
I want a third on five years, I want another
third on three years, and I want another third on
you know, one year. Can you do that and split
it as as you want?
Speaker 4 (21:04):
As far as I'm aware, there's not a restriction at
all as to how many different splits you have, it's
just how many you want to be managing.
Speaker 2 (21:10):
So okay, I've just realized that I probably should have
split mine a bit more because I just you know,
when you get used, this is the thing people will
be listening. You think. I'm sortied. This is what I've got.
I've got a little bit on revolving, but we've paid
off the revolving. We've just got what we've left on
a sex month because I think that's going to keep falling.
And now I think of it, I think well, I
should probably put two thirds of that on the fantastic
(21:33):
rate for a couple of years, unless I think it's
going to get even cheaper, which idn'tify.
Speaker 6 (21:38):
I know.
Speaker 4 (21:38):
This is where having a crystal ball would be really handy,
wouldn't it.
Speaker 2 (21:42):
That would be great if I had a dollar for.
Speaker 4 (21:44):
Every time someone said to me, what do you think
is going to happen about this?
Speaker 2 (21:47):
You know, how do you advise people on that? Because
you are a financial advisor as well, and obviously you
don't give advice to people over the airwaves. It's just
general comments. But what do you say when people say
what do you think is going to happen? Because you're
allowed to say what you think?
Speaker 4 (22:02):
Yeah, absolutely, And I mean part of that is my job.
You know, I've got to give advice based on what
we know about what's happening at the moment and best
guesses as to what's going to happen moving forward. But
you know, this is part of what we do where
we live and breed this stuff every day.
Speaker 2 (22:18):
So well, speaking of those who live and breed the stuff,
are the banks what are they signaling that they think
the cash rate's going to do in the next little
while so.
Speaker 4 (22:29):
They're definitely signaling that they think rates are going to
come down. A lot of the banks drop the interest
rates before the announcement.
Speaker 2 (22:36):
Well that was one of the things that's like people
were holding out for the OCR change. And some of
the comment Trail'd had through guests in the studio is like, well,
the banks have already priced that in, although it does
seem that they've moved a little bit, doesn't it.
Speaker 4 (22:52):
So the thing, I think it's going to be interesting
over the next few months because banks do compete with
each other and when they see one bank reducing rates,
they're like, oh, maybe we should start reducing because they
don't want to be the one that's high higher than
everyone else. You know, because people shop around, and especially
if they're working with a mortgage advisor, the mortgage advisor
knows which banks are offering the best deals at the moment.
Speaker 2 (23:14):
So yeah, so what of the So how do the
banks signal it that you what what do you think
they're going to go down to?
Speaker 4 (23:22):
What do you think that I would say just about
all of the banks are expecting next month's announcement to
be another point five reduction in the OCR at least boomfa.
Some of them are expecting point seventy five.
Speaker 2 (23:36):
Really, I know, wow, I know, how.
Speaker 4 (23:40):
Cool would that be? Every wrong with the mortgage right
now has got their fingers crossed.
Speaker 2 (23:45):
I mean, everyone has their reckons. You know why I
don't think they'll do that is because I think that
Adrian or in the back of his mind and his
team are still worried about giving inflation a bit more
of a nudge, even though we've got it and we're
getting it out of control, that they will be nervous
about giving too much stimulus because that would be at
(24:05):
one point two five percent, which is a lot more
money coming back into the economy potentially.
Speaker 4 (24:11):
So it's all going to depend on the figures that
come in because we've got what is it is GDP's
out next week. I think at the top of my head,
I think it's next week, next Wednesday.
Speaker 2 (24:22):
Okay, Tyra will look at that. We'll get a date
for next on GDP figures when they next out.
Speaker 4 (24:26):
Tyra, I literally just talked about that in the event
that I just ran at work. I can't remember now,
that's all right, brain's shutting down.
Speaker 2 (24:33):
So we're talking the consensus ism. It sounds like a
minimum of point five almost.
Speaker 4 (24:41):
It seems that that's the way that the market must
be things. Yeah. Yeah, So because the OCR announcements every
six weeks except for over Christmas, so next month is
the last one until February. You know, we don't have
another OCR announcement until February. After next month, so yeah,
And I think when the GDP results come out, if
(25:03):
that's showing that the economies in worse shape than they
think it might be, then that increases the chance that
things could drop further.
Speaker 2 (25:12):
Okay, fast the date I've got here. Last one was
nineteenth of December for GDP figures. The next one's September.
The next one's nineteenth of December.
Speaker 4 (25:21):
So what's the one that's out next.
Speaker 2 (25:24):
We'll check it, We'll check.
Speaker 4 (25:25):
Let's keep it.
Speaker 2 (25:26):
We haven't got to break it coming up, No, put
that phone away, a Multiti if she thinks the Reserve
Bank leader knows what he's doing under grant, especially that's
from Duncan looks if it was Ashley Church, I know
it did say he criticized the hell out of him.
Speaker 4 (25:43):
But yeah, I mean I think, and I mean it's
easy to judge from this side, isn't it I've not
been in his shoes. Hindsight, Yeah, benefit of hindsight. I mean,
no one, no one has lived through a global pandemic before,
so none of the central bank leaders around the world
had lived through a global pandemic before. So I think
(26:04):
it is challenging times. In hindsight we can say, I
think he took too long to increase them, And in
hindsight we can say, I think he took too long
to start decreasing. But you know, you can only make
your decisions on the day and be judged poorly for
those decisions further down the track. We've all got the
benefit of hindsight. And what's that saying, hindsight's always got
(26:27):
twenty twenty vision exactly.
Speaker 2 (26:29):
Yeah, well, yeah, you're right. It is difficult because you
just can't put yourself on what we were really saying
before he took action.
Speaker 4 (26:38):
And to be fair, he's not making these decisions on
his own, you know, so no one can just blame
him for everything, and that we might like to.
Speaker 2 (26:49):
I think Debbie wants to Tim, what about that, Well,
this is just a question on income for retirees, But
what about the poor retiree with money and the MAC
relying and topping up his pension with interest from investment.
Speaker 4 (27:01):
Rates exactly when interest rates and savings accounts go down,
and that does affect people that are living off their
interest on their savings. So you know, they've been doing
pretty well with the higher interest rates. There's always a
flip side, is that text?
Speaker 2 (27:14):
And it's right in a way though. If there is
high interest rates, it means that also it's high inflation,
so you might be getting more for your buck, but
you're als having to spend more. So what if the
interest rates for that means inflations come down. Does that
mean it's not as dramatic as that text sounds or I.
Speaker 4 (27:34):
Don't no, I think it's I think it's tough. It's
tough for retirees that are relying on savings. So you know,
this is where key we save is a good idea
because you know, and managed funds as well. Managed funds
do tend to give a stronger return over the long
term than savings accounts. Fixed term deposits at the moment
(27:55):
are still pretty good, so you know, if you're looking
at getting higher interest rates for the next five years,
for example, long term fixed deposits, news for you By.
Speaker 2 (28:05):
The way, the announcement you're thinking about, which is sixteenth
of October, which is Wednesday, is the inflation announced fact.
Speaker 4 (28:12):
I knew it was one of them. I knew it
was one of them. I literally just talked about it.
Speaker 2 (28:17):
Right, We're going to take a break. You can give
us your calls. Where are you happy with the reduction
and the interest rate and how much further should it fall?
With YOCA. We're also going to touch on just this
bit of news that one person households have increased by
one hundred and twenty thousand over the past decade, but
only thirty percent of new builds are one or two bedrooms,
and begs the question about what sort of property makes
(28:40):
the best investment. We'll be having a chat with Debi
about that in just a moment. The number is eight
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Speaker 1 (29:58):
Helping you to get on top of your busy life.
Tim Beveridge on the Weekend Collector News Talk SETB.
Speaker 2 (30:04):
And my guest is from the property Apprentice, Debbie Roberts. Debbie,
let's just quickly talk about the top sort of houses
that are not being built or the increasing number of
people just in one person residences. I mean, is there
if you're an investor, I must admit I just sort
of think without being an investor, I want definitely three
(30:26):
bedrooms minimum. Is that why we're not really building a
lot of one on two bedrooms or is there a
space for movement there?
Speaker 4 (30:33):
I think there's definitely space for movement. With the changing demographics,
you know, we are seeing more people living alone or
just one or two people, and you know, one bedroom
properties is more than enough for a lot of people,
and it's certainly one way with developers building one and
two bedroom properties. It's a way that we're going to
see prices, you know, getting reasonable for first time buyers.
(30:56):
Like first time buyers don't necessarily need a three bedroom
house or want one.
Speaker 2 (31:01):
Of course, you're not going to get a house, are you.
You're going to be getting a uni or own apartment?
Speaker 4 (31:06):
Well potentially, I.
Speaker 2 (31:06):
Mean who would. I mean, you wouldn't have a piece
of land where you've got a house and you just go, no,
let's just make it the one bedroom. Thanks, make it
a big one. But it's just one.
Speaker 4 (31:15):
Exactly, I mean. And this is one of the reasons
that the government's looking at introducing the granny flat, you know,
the proposal where you can add an extra dwelling.
Speaker 2 (31:23):
The sixty square meter thing, yeah, exactly, that's a monster.
Speaker 4 (31:27):
Square meters is a decent size. The first property we
purchased was an eighty square meter two bedroom house and
we thought it was great. It was on four hundred
square meters of land.
Speaker 2 (31:36):
What are the old workers cottages that Ponsibly used to
be before it became the trendy place. They still are
sort of that size, but they've just been spruced up
a bit.
Speaker 4 (31:46):
Yeah, I don't know. I think it's good that the
developers are starting to make you know, one in bedroom,
one and two bedroom properties because it does give people
a bit more choice. You know, not everyone wants to
have borders or flatmates or to.
Speaker 2 (31:59):
Pay off the rent. Of course, you've just made a
case for actually having a larger property because so well,
now for that extra bedroom out.
Speaker 4 (32:05):
And potentially, yeah, but not everyone wants to do that.
So and when it comes to buying investment properties, you
need to think about what tenants in the area look
for because so some areas there's no demand for one
and two bedroom properties because they're multi generational families. They
want to you know, they want five or six bedroom
houses to rent all properties with a sleepout that you
(32:27):
know that adult kids can live in. So it depends
on the area that you're investing in. You wouldn't buy
a five bedroom house in an area where there was
demand for one bedroom and two bedroom properties.
Speaker 2 (32:37):
Because an vice, because I mean, they're still not building
a lot of one or two bedroom places, are they,
I mean, unless, of course it's retirement villages, which probably
specialize in one or two bedrooms.
Speaker 4 (32:48):
Yeah, there's lots of townhouses that were built in the
last couple of years that were one and two bedrooms.
So yeah, and in some areas there's an oversupply of
those in the rental market now. So you know you
do it because a lot of them all came to
the market at the same time. They all came at
completion at the same time time everyone's looking for tenants
for one and two bedroom property. So you do have
(33:08):
to actually do some homework before you purchase an investment property.
Not every property is a good investment.
Speaker 2 (33:15):
That actually is quite a good question we could probably
explore another time as to how much how long it
takes you to do your homework on because I mean,
homeworker is a never ending, never any journey, really when
it comes to understanding what the property market is. But
if you were looking for an investment property, how much
home would you need to do? It's that's probably what's
(33:37):
why I've never done it. It just feels endless.
Speaker 4 (33:39):
It's probably the toughest decision that a new investor has
to make, and that's where having some help along that
journey can make things a little bit easier, you know.
I mean, we've got access to a whole bunch of
information that helps people make decisions and based on their
financial position and how much they can borrow. There's so
(34:00):
many different things that come into it.
Speaker 2 (34:01):
So, by the way, that when where were in the
document that we put together for the show, and we've
just got the summary of things around the number of
households one hundred and twenty thousand, one person households over
the past decade, and it says, but only thirty percent
of new builds a one or two bedroom. I actually
don't mind telling you, I'm surprised that it's as much
(34:22):
as thirty percent, because I would have thought that's still
the bulk of most construction requirements, unless it's just multi
story apartments, I guess, but a lot of the investment
would still be in people building three bedroom homes or
not all three or four bedroom I don't know.
Speaker 4 (34:35):
If you look around Auckland and look around christ Church,
there's a whole bunch of one and two bedroom properties
being built.
Speaker 2 (34:41):
So would you invest in a one or two bedroom property.
Speaker 4 (34:44):
If there was demand from tenants? There? Absolutely?
Speaker 2 (34:46):
And how would you work out a first demand from
tenants there?
Speaker 4 (34:49):
Took to a good property manager in the area. They
know what people are looking for.
Speaker 2 (34:53):
I think we might have to save that question about
how much homework you need to do because a lot
of people who listen to a show like this, you know,
there'll be people who've got an active interest in investment,
but there are people probably like me you who have
thought one need to do it at some stage. You
need to do it at some stage, but really haven't
got beyond I mean, I do a property show every week,
but haven't got beyond that sort of skirting around the
(35:15):
edges and knowing a little bit about nothing, well a
lot about very little bit, you know what I mean?
And actually how much due diligence you really need to
do on that journey to buying that first investment property.
Speaker 4 (35:27):
So I mean there is quite a few things that
you need to check out to make sure that you're
not buying a lemon. So like a building inspection. You know,
once you've got a property under contract, you've got to
do a building inspection in my opinion, even if it's
a new build, get drug tests done if you're going
to rent it out.
Speaker 2 (35:45):
Well, that's just a checklist on practicality, forgetting the money,
forgetting the actual whole investment equation and prediction.
Speaker 4 (35:52):
I mean investing in properties, not rocket science. This is
the thing, but it's like most people don't know how
to do it because they've never done it before.
Speaker 2 (35:59):
And that's where a property apprentice comes in, of course. Yeah. Actually,
just few texts before we head to the break High
to Mike Blackburn, hair, I write, I think it might
be wrote, I write the Canterbory construction report. Here in
christ Churche, approximately seventy percent of all new dwellings consented
are smaller multi units with an average floor size of
(36:21):
eighty six square meters. Okay, that's good. I wonder what
amongst those smaller units. I keep on thinking it's just
retirement villagers. Actually only because I've seen a few retirement
villages when I'm down there getting built and I think, gosh,
that's expanding.
Speaker 4 (36:35):
You know, a lot of the new builds have been
targeting property investors because you know, with the previous government,
obviously new builds had tax benefits for property investors if
they were new build versus existing. So that's all changed now.
You know, those tax benefits for new build over existing
is disappearing quickly. So yeah, these I think things are
(36:59):
going to get a lot more stable in the investment market,
but certainly some areas have gotten over supply for rental properties.
Speaker 2 (37:06):
Right, We're gonna take a quick break, come back and
just to take the one roof property of the week.
As next it's ten minutes to five news talks. He'd be.
Speaker 3 (37:22):
A honey bug.
Speaker 2 (37:25):
Maybe under you take nowhere and welcome back to the
Weekend Collective. I'm Tim Beverage. My guest is DeBie Roberts
from Property Prentice. That is Property Apprentice dot co dot Nz.
Right now it is just gone seven minutes to five.
Speaker 1 (37:49):
The one roof property of the week on the Weekend Collective.
Speaker 2 (37:53):
Yes, the one roof property of the week is They're
always gorgeous, so I'm not gonna repeat myself. It is
so go and have a look for this on the
one Roof website One roof dot co dot Nz. It's
thirty three c Titty Mowana Terrace on a Keywa in Marlborough.
The asking price is, I mean, it's a lot of money,
(38:13):
but it's not a lot of money for Auckland people.
Nine hundred and thirty thousand dollars. Although it's one bedroom,
one bedroom, one bathroom, two car covered shed. Actually it's
the shed I quite like. It's got a nice collection
of firewood in there. It's situated on a prime ridge
line overlooking the expanse of un Keywa area and it's
(38:35):
a charming home offering incredible views down the length of
Queen Charlotte sound gorgeous lookout at The completely off grid
property features a new solar power system, clear water septic
system and a new backup generator and it's described as
being low maintenance, ideal for both holiday retreats and permanent living.
Probably more off the grid for permanent living than I fancy,
(38:57):
but DeBie. We share our probably the week with my
guess and Debbie Roberts. It is a I mean, picturesque,
gorgeous isn't it beautiful view?
Speaker 4 (39:03):
And it's on thirty two point four two hectares, so
you know, if you don't want to live in the
tiny little house that's there at the moment, build something.
Speaker 2 (39:11):
Yeah, it is gorgeous look and obviously the photography is
done on a beautiful day. But down to them and
the sounds, you just can't beat it. They do have
looks like a bath that might be heated up heat,
might be heated up by fire, one of those things
that looks good in a brochure. But I'm not sure
I every want to go to the chore of lighting
it and boiling myself alive.
Speaker 4 (39:31):
It looks pretty secluded that bath, though, yes.
Speaker 2 (39:34):
It does well. It's just as well because generally when
one is in the bath, one is nudies generally.
Speaker 1 (39:39):
Yes.
Speaker 2 (39:40):
Anyway, Hey, hey did it ever? Quick text? Somebody's just
asking why they still stress testing at nine percent? Any
comments on that?
Speaker 4 (39:47):
Oh, so stress tests are definitely coming down. So most
of the banks are now stress testing between eight and
eight and a half percent now, so yeah, it's definitely
getting easier. But you know, a couple of weeks ago
it was eight point five to eight point seventy five
stress tests. So yeah, it's definitely definitely coming down.
Speaker 2 (40:07):
And just once again, by the way, if you if
you want to check out that property of one with
probably the week I'm still grazing through the photos of
a little bit thirty three C two Mowana terracet Anakiwa,
Marlborough and Debbie. Nice to see you. Good to know
you're working hard and keeping yourself busy.
Speaker 4 (40:24):
Keeping out of trouble.
Speaker 2 (40:25):
Yep, we'll catch you again. Okay. If you've missed any
of the previous hour discussion about the ocr and smaller dwellings,
go and check out the podcast. Look for the Weekend
Collective on iHeartRadio. We'll be back very shortly. The Parents
Squad Catherine Burkitt's with us and how far you know
the term is starting tomorrow. Kids are going to be
into the study pretty soon. Do you need to ride
(40:48):
them and nag them to get there, do their homework
and their study? You just leave them to make their
own mistakes. We'll be talking about that in the Parents
Squad very shortly. News Talks.
Speaker 3 (40:54):
He'd be.
Speaker 1 (40:58):
For more from the Weekend Collective. Listen live to news Talks.
It'd be weekends from three pm, or follow the podcast
on iHeartRadio
You're listening to the Weekend Collective podcast from News Talks.
Speaker 2 (00:09):
I'd be.
Speaker 3 (00:11):
Stun the sky like a tag and the viol Love.
Speaker 2 (00:28):
I'm a racing came to do.
Speaker 3 (00:35):
Business stuff.
Speaker 2 (00:45):
I'm sun Stop and welcome back to the one. This
is the week in Collective and this hour it's the
one Rufe Radio show. I'm Tim Beveridge. If you missed
a panel with a lovely panel actually because if well
you have just joined, and if you've if you haven't joined,
and I'll be flogging it to death the news that
(01:06):
Wilhelmina Shrimpton, one of my panelists, had just got engaged
to her lovely partner Ben O'Keefe, and we flogged that
a little bit with the music and everything. But it
was a great panel with Wilhelmina and Mark Kreisel. You
can check it out. Go and look for our podcast.
Look for the Weekend collect Them on iHeartRadio as usually
the best place to start to go to the News
Talks at b website and we get these hours loaded
pretty quickly once they've concluded. By the way, just looking
(01:30):
ahead to the next hour for the Prince Squad. Catherine
Burkett is with us to talk about whether you should
you know, how hard you need to encourage or nag
your kids on studying or do you leave them to
make their own decisions. We'll be taking your calls on
that as we do this hour. We want your calls
for the one roof radio show on over one hundred
and eighty ten and eighty text nine nine two. And
(01:51):
my guest is she is a financial advisor at Property
Apprentice and her name is Debbie Roberts. And almost get
into the stage where we need an open production. People
will recognize your voice, Debbie, just about I want imagine
thank you.
Speaker 4 (02:03):
That's kind, but probably.
Speaker 2 (02:05):
How are you anyway?
Speaker 4 (02:06):
I'm good, I'm good.
Speaker 2 (02:08):
You've been keeping yourself out of mischief?
Speaker 3 (02:09):
Yes?
Speaker 4 (02:10):
Absolutely, things are certainly getting busy at the moment.
Speaker 2 (02:13):
Well, we're going to talk about the OCR because the
Reserve Bank has dropped the OCR by fifty basis points.
A lot of Now this is for you if you're listening.
How far do you want it, want it need it
to fall? And how fast should it fall? There's so
many I mean basically should it, could it? Or what
do you need it to fall? To the OCR Because
a lot of commentary I've seen is that we know
(02:37):
that Adrian Or he was. In fact, I think there
was a time, wasn't there, Debbie, when he was talking
about he might lower it next year, And of course
he didn't really realize to detrash the economy so effectively
exactly exactly.
Speaker 4 (02:50):
He was originally talking about not reducing it until maybe
middle of next year at one point. But I think,
you know, in my opinion, I think he raised it
too late and he's reduced it too late. He should
have started reducing ages ago. I think, yeah, there's a
lot of blood in the water at the moment.
Speaker 2 (03:09):
Actually, I'm glad to hear you use a dramatic expression
like that, because a lot of the time, the language
of economics denies the human suffering that goes on when
you raise an interest rate, and people if you have
to have a mortgage sale, that is a massive, massive
(03:30):
toll to take on any individual, and economists use the expression.
I think Adrian Or used it. I'm not going to
pick on him. He's using the language that he's accustomed to.
But you know, there's going to be a little bit
of pain that we might have. There might be a
bit more pain. It's not like someone just you know,
injects you with a little bit of pain for a
moment where you'll feel some temporary discomfort. It's going to
ruin lives.
Speaker 4 (03:51):
Yeah, absolutely, And I think potentially the biggest issue at
the moment is the pain that the economy is suffering.
You know, to be fair, with banks testing affordability at
much higher interest rates than they than are currently on offer.
That's prevented a lot of people from getting into mortgage
g sales. I mean, we saw a lot more mortgage
(04:12):
e sales in the Global financial crisis than we've seen
this time round because the banks are implementing those high
test rates, so they were stress testing everyone before they
even signed off the mortgage, which has helped.
Speaker 2 (04:25):
Is there also have banking practices in the last twenty
years or so changed a bit.
Speaker 4 (04:31):
So they've changed dramatically.
Speaker 2 (04:34):
Okay, good. I do remember the black and white section
of the property whatever it was that you'd read, and
that's the mortgage sales used to be quite thick, and
you just observe that there are fewer, so obviously the
banks are doing much more to try and protect the
interests of their borrowers.
Speaker 4 (04:52):
Well, I think ever since the Global Financial Crisis, to
be fair, all the rules around lending changed quite dramatically,
and then with the implementation of the Triple CFA, they
changed again. So the rules around a definitely starting to relax.
So getting lending is starting to get a little bit easier,
which is great. The difficulty at the moment, I think,
(05:14):
and this is one of the reasons that we're seeing
the ocr coming down, is because the economy is struggling,
you know, and when the economy struggles, people lose jobs,
businesses go into liquidation, you know. So we've essentially been
in an economic downturn. We've been in what's the word,
I'm looking for a recession for nearly three years. You know.
(05:36):
It's been brutal for a lot of people.
Speaker 2 (05:38):
So, by the way, just so if you have I mean,
because sometimes people digest their news infrequently. So the cash
rate has been reduced by fifty basis points to four
point seventy five percent. A question for you, and Debby's
going to give her view on what she understands it
maybe needs to happen, or what the banks also are
(05:59):
anticipating because they spend a lot of time thinking about
the stuff and trying to guess what Adriana was going
to do. But the question for you is on I
eight hundred eighty ten eighty was that enough? Or do
you think that adrian or needs to do more? Now?
So it's been chopped point five of a percent fifty
basis points? Always think basis points? Why do't they just
(06:20):
say half a percent? Anyway, that's the language of economists,
I guess, But do they need should it for? Should
it be cut further? And will it be cut further?
I eight hundred eighty ten eighty. You can give your
reckons on that, Debbie, What do you reckon?
Speaker 4 (06:35):
I reckon? So I reckon it absolutely needs to come
down further, and I think it needs to come down
hard and fast. So a lot of economists are expecting
at least a point five reduction in November. Whoa, I know,
but that's and that's what the financial markets are factoring
in as well. So at least a point five?
Speaker 2 (06:57):
Why why should it be another point five?
Speaker 4 (06:59):
And what what the economy's tanking?
Speaker 2 (07:01):
And what will that? How do? What are the economic
gears that get pulled when you drop the interest rate?
How does that play out? From your perspective?
Speaker 4 (07:10):
It gives people hope you know, is that just.
Speaker 2 (07:15):
All because the cost of investing in building and infrastructure
and everything, it just gets cheaper, and it means that
we can see more action and that feeds through the
rest of the economy and business and borrow cheaper and
all that.
Speaker 4 (07:27):
That's part of it. But I think probably, and I
could be wrong here. This is just my personal opinion,
but I think the reason that the ocr needs to
come down is to give mortgage owners, like people who've
got mortgages on their homes, give them some interest rate relief,
because then they're going to have more money to spend
in the economy. Because it's the businesses that haven't been
(07:48):
doing sales that have been struggling, like you know, think restaurants,
think luxury items, you know, clothes. People have been spending
less on clothes, they've been spending less on furniture, they've
been spending less on things that are seen to be
not necessarily seen uls but nice to have. So those
(08:08):
sort of companies in those industries have really done it tough.
Speaker 2 (08:12):
Because for somebody who's got a chunkyish sort of mortgage,
I don't know what the average mortgage borrowing would be
these days. But if you think of people in the
first ten years that they're borrowing, they could have you know,
I don't know, five hundred to a million dollars on
mortgage much money.
Speaker 4 (08:28):
Don't remember the average mortgage around I saw something just
a couple of days ago, about half of mate. It's
about four hundred and eighty thousand I think is the
average mortgage for a first home buyer.
Speaker 2 (08:39):
Because one percent on a half million dollar mortgage, that's
what's that year. Hundred bucks a week about that.
Speaker 4 (08:47):
So most people in New Zealand at the moment when
they're refixing their mortgages, they're either floating or just fixing
for six months. So that means and that's quite different
to the long term normal, like the long term Norman
New Zealand is twelve month fixed rates or two year
fixed rates. So that's changed. People are moving towards the
(09:08):
shorter term interest rates now because they know that interest
rates are on the way down. So you know, people
are they're not wanting to fix for longer term, which
I think is a smart decision because I do think
there is going to be some more reductions and interest rates.
Speaker 2 (09:22):
Well, does anyone think that they're I mean, all the
banks are trying to do with their longer term borrowing
is make it so attractive that people sign up for
maybe two or three or four years.
Speaker 4 (09:33):
The cheapest rates are the four and five year rates
at the moment.
Speaker 2 (09:36):
Which tells you where they think the interest rates are going,
which is down.
Speaker 4 (09:39):
Yeah, exactly, because they want you to fix for long
term so you don't refinance to another bank. What's in my.
Speaker 2 (09:46):
Opinion, actually, I guess that must be the only motivation, because, yeah,
why would they offer cheaper money. It's because they want
they want your business for longer.
Speaker 4 (09:53):
Yeah, and there's some banks that are offering cash backs
if you refinance to them, you know, so they're trying
to they're trying to get your money. They're trying to
get your business. So if they've locked you into a
longer term interest rate, you're less likely to refinance to
another bank because you have to pay break these And my.
Speaker 2 (10:10):
Producer Tire has told me that the average first home
buyer mortgage it's sort of thinking of people at first
home buyers, is five hundred and fifty four thousand dollars off.
What did you think it was?
Speaker 4 (10:21):
I thought it was about four eighty.
Speaker 2 (10:24):
Yeah, I think that's a pretty good guess. It was
in the vicinity of half a million.
Speaker 4 (10:28):
I've read a lot of articles this week and I'm
bit sleep deprived.
Speaker 2 (10:31):
The age you've been working hard that we want to know.
The average owner occupied mortgage is three hundred and nine
thousand dollars. So that's on average, which means there'll be
people who are a lot more than that. I mean,
there'll be people who have had comfortably not comfortably. But
if you're buying in a market like Auckland, and you've
got a reasonable disposable income where you want the house
you want, you might have a million dollar mortgage plus easily.
Speaker 4 (10:55):
She would think there's definitely people out there with that
sort of mortgage on their home. Whether that's a smart
decision or not is a different story.
Speaker 2 (11:02):
Yes, I know someone who works on the show who's
is probably wincing at those words.
Speaker 4 (11:07):
Actually, well, it depends on your financial position.
Speaker 2 (11:10):
Well, because just to paint, but to paint a picture
of it. What my memories deserted me on this. But
what were people borrowing at at its cheapest? Were there
something like two point nine to nine percent mortgages going
for a while?
Speaker 4 (11:23):
Yeah, so that was during COVID you know, during COVID,
the Reserve Bank slashed the OCR and at that point,
interest rates were two and a half three percent, you know,
two and a half to two point nine to nine percent.
So a lot of people fixed their mortgages for five
years on those cheap interest rates.
Speaker 2 (11:41):
Very good move, absolutely.
Speaker 4 (11:43):
And you know, some of them still haven't come off
those low interest rates. Most of them will have come
off those low interest rates before the next you know,
before the end of the next twelve months, but you know,
that's going to have quite an impact. I think the
important thing to remember is that the average long term
interest rate in New Zealand, excluding the period during COVID
(12:04):
when things were unusually low, the long term average interest
rates six point three five percent.
Speaker 2 (12:12):
So that also begs the question what is the sort
of optimum interest rate that we should expect or I mean,
because there's one thing to say, I want interest rates
to be four percent or something, but it's not really
going to happen realistically.
Speaker 4 (12:26):
It's not likely to get that. Like, I mean, interest
rates have been trending lower over the last decade or so,
so they have definitely been showing a downward trend. Why
is that just because I think central banks around the
world have been learning. You know, we haven't always had
a reserve bank in New Zealand that's controlled things with
the OCR in the eighties, did you didn't have twenty
(12:49):
percent plus? You know that was before the OCR. So
OCR has helped to control interest rates to a certain extent.
So yeah, it's not all bad.
Speaker 2 (12:58):
Yeah, okay, we want your calls. One hundred and eighty
ten eighties. The cash rate has been dropped by zero
point five percent forty basis points, as they like to say,
doesn't need to fall further. And if you want a
little a little bit more context, the interest rates being
offered by banks, the variables are around just under eight percent,
and if you want to go six months or a year,
(13:19):
it's around sort of six and a half ish percent,
depending on which what your bank is. Oh, actually that's
if you've got good equity, Either that or you're looking
at about seven percent for six months or a year.
It gets cheaper and cheaper and cheaper at the further
you go out. What do you think it should be?
What does it need to fall for you to be
able to actually start spending money on anything apart from
(13:40):
your mortgage and food. Oh, eight hundred eighty ten eighty
text nine two nine two. We'll be back in just
a moment. It's coming up to twenty one past four.
Speaker 5 (13:47):
News Talk said, b's never seems good.
Speaker 2 (14:06):
And welcome back to the one riffradio show on the
weekend Collective. I'm Ton Beverage. My guest is Debbie Roberts.
She's a financial advisor at Property Apprentice. DEBI if people
want to get in touch with Property Apprentice, it is
Property Apprentice dot co dot NZ. Correct with this relief. Now,
by the way, I have said some text people telling
me that my figures are on what the interest rates are. Look,
(14:27):
I'm scanning a page of about probably about it one hundred,
one hundred and fifty interest rates. And yes there are
some cheaper ones for five point seventy five percent or
five point sixty nine for two or three year mortgages. Yes,
that's right, but they also some of many of those
(14:47):
rates are if you've got decent equity. But there is
one I think the Asb's offering five point six nine
percent for two years. That's s actually not a bad deal,
is it, Debbie.
Speaker 4 (14:55):
Yep, there's some pretty good deals out there at the
moment for sure.
Speaker 2 (14:59):
So, yeah, what do you think should happen with the
OCI should it continue to fall? And we'll talk to
Debbi in just a moment about what she knows the
ban Thanks are planning on, because they'll be thinking ahead
on this one for sure. Aaron High, Hey, they have
a going good Hey.
Speaker 6 (15:16):
Yeah, I've got a mortgage bought two years two and
a half years ago now, and that was kind of
when the industrates are kind of starting to kind of
get up and say a little bit of those Midt
late fives, hot mid six, this kind of thing, And
I'm pretty happy with what I was playing. I split
(15:39):
my mortgage onto two different rates, and so I think
that's one thing that a lot of people don't know
that they can do, and I think sometimes some banks
don't often tell people that they can do, is even
splitting your mortgage rate, your mortgage amount into a couple
of amounts and then at least you can take the
benefit of long term on part of it, and then
(16:01):
you've got some on some on shore terms as well.
Speaker 4 (16:04):
Yeah, absolutely thinks of.
Speaker 6 (16:06):
His rate changes and things like that too.
Speaker 4 (16:08):
Really good strategy. And you know, I think I've read
an article recently that said that most New Zealanders don't
know that mortgage advisors are free to work with because
they get paid by the banks. So like, we've always
recommended that people work with a mortgage advisor because they
essentially work for you even though they get paid by
the banks. They work for you and your best interests,
(16:30):
and they've got access to over twenty lenders, you know,
so they can shop around, get the best deal for
you and help advise you on the structures.
Speaker 2 (16:39):
Feet Lane, did you get yours through mortgage advisor?
Speaker 6 (16:41):
Did you say, Aaron, Well, I had a friend of
mine who's a mortgage broker. Yes, but I've kind of
I already have. I had a house about fifteen years ago,
originally as my first house when I was about eighteen,
and I remember interest from its back then we're about
eight to eight seven eight. But I think people when
(17:03):
interest rates were really low, people are like, oh, yeah,
my borrowing power is this. I can spin up to
this not thinking a head, and I'm like, Okay, if
the interest rates are going to be at two percent, now,
what are they going to be in two or three
years when they come off the fixed rate? And then
this is why people freaked out when they were five
and six percent coming off their fixed rates, and they
(17:23):
were like, because they're over capitalized, over mortgaged.
Speaker 2 (17:28):
I'm glad you mentioned the more that we've talked about
the mortgage broker, because we used one when we first.
Because I work on a property show and I meet
a lot of people, somebody produced me. But I actually
wasn't going to initially because I was I don't know,
I just had this wasn't it in bills and built prejudice?
But I thought, what do I need to go to
(17:48):
mortgage advisor. I'll just go to the banks until somebody
gave me good advice and says no, they'll and they'll
also do the thinking for you on the way you
can structure the mortgage because they do it all the time.
And it was, yeah, and.
Speaker 4 (18:00):
All banks are different, you know, because it depends on
your individual situation, and you know, some banks are friendlier
than others if you're self employed, or if you earn
bonuses or commissions, and you know, there's so many different variables.
So if you go directly to a bank, they're only
going to tell you about their stuff. They're not going
to say they're not going to say, oh, we can't
give you lending, but if you go down the road
(18:21):
and see that bank, they'll approve it, whereas a mortgage
advisor can.
Speaker 6 (18:27):
Yeah, that was really handy with my broker. Was like
for me coming back into the property after about fifteen years,
I was as a first time buyer, so there was
the kind of work ins and outs of using kvsaver.
I couldn't use part of my kisaver, and they knew
banks that would potentially help with with the with the
(18:48):
income and all that kind of was that what do
you what.
Speaker 2 (18:51):
Do you think is going to happen? What do you
think is going to happen with the cash? Right? Do
you do you need it to for further for yourself
or do you want it to fall further? And do
you expect it to fall further?
Speaker 4 (19:02):
Yes.
Speaker 6 (19:02):
So, because I had my split rates, I had one
for one year and one for two years. So my
first year came off at the start of this year
was February, and I fixed. I ended up fixing that
for five years at five point nine percent, and so
my second part, my second half, comes off in February
next year. So I'm kind of hoping that dropped quite
(19:24):
a bit, so that my other half will get them
a slow rate.
Speaker 4 (19:29):
Actually, that's I think that's probably going to be quite
good timing if that's coming off in February, because I mean,
the financial markets are certainly factoring in big drops between
now and then.
Speaker 2 (19:39):
So yeah, good, thanks for call Aaron. Good on your mate. Yes, okay,
bye bye. Actually, how many ways can you put your
mortgage realistically? Because there would be people who for sure
have In fact, I would imagine that most people would
have a revolving aspect to their mortgage.
Speaker 4 (19:57):
Oh you might be surprised, I'd say most people don't.
Speaker 2 (20:01):
Isn't that funny because I just assumed that that you'd
have a revolving one that you would put everything into
to try and reduce whatever you had on that or
some aspects, even if it's ten twenty thirty thousand, so
it's like your living expenses. But if you can be frugal,
you can pay that off.
Speaker 4 (20:18):
Yeah, revolving credits and offset that wants are a great
way to pay your mortgage off faster. But you've got
to be pretty good with your money management. Not everyone is,
So if someone's not very good with budgeting, it'd be
a nightmare. Okay, And Also, it does affect how much
you can borrow because the offset loan and the involving
credit they're on a floating interest rate, so banks test
(20:40):
it differently, So it does affect how much you can borrow.
So if you're borrowing capacity is pretty limited, then the
mortgage advisor would probably suggest.
Speaker 2 (20:49):
Not just yet, how many ways can you how many
ways can you split the morghage? Could you go for
I want a third on five years, I want another
third on three years, and I want another third on
you know, one year. Can you do that and split
it as as you want?
Speaker 4 (21:04):
As far as I'm aware, there's not a restriction at
all as to how many different splits you have, it's
just how many you want to be managing.
Speaker 2 (21:10):
So okay, I've just realized that I probably should have
split mine a bit more because I just you know,
when you get used, this is the thing people will
be listening. You think. I'm sortied. This is what I've got.
I've got a little bit on revolving, but we've paid
off the revolving. We've just got what we've left on
a sex month because I think that's going to keep falling.
And now I think of it, I think well, I
should probably put two thirds of that on the fantastic
(21:33):
rate for a couple of years, unless I think it's
going to get even cheaper, which idn'tify.
Speaker 6 (21:38):
I know.
Speaker 4 (21:38):
This is where having a crystal ball would be really handy,
wouldn't it.
Speaker 2 (21:42):
That would be great if I had a dollar for.
Speaker 4 (21:44):
Every time someone said to me, what do you think
is going to happen about this?
Speaker 2 (21:47):
You know, how do you advise people on that? Because
you are a financial advisor as well, and obviously you
don't give advice to people over the airwaves. It's just
general comments. But what do you say when people say
what do you think is going to happen? Because you're
allowed to say what you think?
Speaker 4 (22:02):
Yeah, absolutely, And I mean part of that is my job.
You know, I've got to give advice based on what
we know about what's happening at the moment and best
guesses as to what's going to happen moving forward. But
you know, this is part of what we do where
we live and breed this stuff every day.
Speaker 2 (22:18):
So well, speaking of those who live and breed the stuff,
are the banks what are they signaling that they think
the cash rate's going to do in the next little
while so.
Speaker 4 (22:29):
They're definitely signaling that they think rates are going to
come down. A lot of the banks drop the interest
rates before the announcement.
Speaker 2 (22:36):
Well that was one of the things that's like people
were holding out for the OCR change. And some of
the comment Trail'd had through guests in the studio is like, well,
the banks have already priced that in, although it does
seem that they've moved a little bit, doesn't it.
Speaker 4 (22:52):
So the thing, I think it's going to be interesting
over the next few months because banks do compete with
each other and when they see one bank reducing rates,
they're like, oh, maybe we should start reducing because they
don't want to be the one that's high higher than
everyone else. You know, because people shop around, and especially
if they're working with a mortgage advisor, the mortgage advisor
knows which banks are offering the best deals at the moment.
Speaker 2 (23:14):
So yeah, so what of the So how do the
banks signal it that you what what do you think
they're going to go down to?
Speaker 4 (23:22):
What do you think that I would say just about
all of the banks are expecting next month's announcement to
be another point five reduction in the OCR at least boomfa.
Some of them are expecting point seventy five.
Speaker 2 (23:36):
Really, I know, wow, I know, how.
Speaker 4 (23:40):
Cool would that be? Every wrong with the mortgage right
now has got their fingers crossed.
Speaker 2 (23:45):
I mean, everyone has their reckons. You know why I
don't think they'll do that is because I think that
Adrian or in the back of his mind and his
team are still worried about giving inflation a bit more
of a nudge, even though we've got it and we're
getting it out of control, that they will be nervous
about giving too much stimulus because that would be at
(24:05):
one point two five percent, which is a lot more
money coming back into the economy potentially.
Speaker 4 (24:11):
So it's all going to depend on the figures that
come in because we've got what is it is GDP's
out next week. I think at the top of my head,
I think it's next week, next Wednesday.
Speaker 2 (24:22):
Okay, Tyra will look at that. We'll get a date
for next on GDP figures when they next out.
Speaker 4 (24:26):
Tyra, I literally just talked about that in the event
that I just ran at work. I can't remember now,
that's all right, brain's shutting down.
Speaker 2 (24:33):
So we're talking the consensus ism. It sounds like a
minimum of point five almost.
Speaker 4 (24:41):
It seems that that's the way that the market must
be things. Yeah. Yeah, So because the OCR announcements every
six weeks except for over Christmas, so next month is
the last one until February. You know, we don't have
another OCR announcement until February. After next month, so yeah,
And I think when the GDP results come out, if
(25:03):
that's showing that the economies in worse shape than they
think it might be, then that increases the chance that
things could drop further.
Speaker 2 (25:12):
Okay, fast the date I've got here. Last one was
nineteenth of December for GDP figures. The next one's September.
The next one's nineteenth of December.
Speaker 4 (25:21):
So what's the one that's out next.
Speaker 2 (25:24):
We'll check it, We'll check.
Speaker 4 (25:25):
Let's keep it.
Speaker 2 (25:26):
We haven't got to break it coming up, No, put
that phone away, a Multiti if she thinks the Reserve
Bank leader knows what he's doing under grant, especially that's
from Duncan looks if it was Ashley Church, I know
it did say he criticized the hell out of him.
Speaker 4 (25:43):
But yeah, I mean I think, and I mean it's
easy to judge from this side, isn't it I've not
been in his shoes. Hindsight, Yeah, benefit of hindsight. I mean,
no one, no one has lived through a global pandemic before,
so none of the central bank leaders around the world
had lived through a global pandemic before. So I think
(26:04):
it is challenging times. In hindsight we can say, I
think he took too long to increase them, And in
hindsight we can say, I think he took too long
to start decreasing. But you know, you can only make
your decisions on the day and be judged poorly for
those decisions further down the track. We've all got the
benefit of hindsight. And what's that saying, hindsight's always got
(26:27):
twenty twenty vision exactly.
Speaker 2 (26:29):
Yeah, well, yeah, you're right. It is difficult because you
just can't put yourself on what we were really saying
before he took action.
Speaker 4 (26:38):
And to be fair, he's not making these decisions on
his own, you know, so no one can just blame
him for everything, and that we might like to.
Speaker 2 (26:49):
I think Debbie wants to Tim, what about that, Well,
this is just a question on income for retirees, But
what about the poor retiree with money and the MAC
relying and topping up his pension with interest from investment.
Speaker 4 (27:01):
Rates exactly when interest rates and savings accounts go down,
and that does affect people that are living off their
interest on their savings. So you know, they've been doing
pretty well with the higher interest rates. There's always a
flip side, is that text?
Speaker 2 (27:14):
And it's right in a way though. If there is
high interest rates, it means that also it's high inflation,
so you might be getting more for your buck, but
you're als having to spend more. So what if the
interest rates for that means inflations come down. Does that
mean it's not as dramatic as that text sounds or I.
Speaker 4 (27:34):
Don't no, I think it's I think it's tough. It's
tough for retirees that are relying on savings. So you know,
this is where key we save is a good idea
because you know, and managed funds as well. Managed funds
do tend to give a stronger return over the long
term than savings accounts. Fixed term deposits at the moment
(27:55):
are still pretty good, so you know, if you're looking
at getting higher interest rates for the next five years,
for example, long term fixed deposits, news for you By.
Speaker 2 (28:05):
The way, the announcement you're thinking about, which is sixteenth
of October, which is Wednesday, is the inflation announced fact.
Speaker 4 (28:12):
I knew it was one of them. I knew it
was one of them. I literally just talked about it.
Speaker 2 (28:17):
Right, We're going to take a break. You can give
us your calls. Where are you happy with the reduction
and the interest rate and how much further should it fall?
With YOCA. We're also going to touch on just this
bit of news that one person households have increased by
one hundred and twenty thousand over the past decade, but
only thirty percent of new builds are one or two bedrooms,
and begs the question about what sort of property makes
(28:40):
the best investment. We'll be having a chat with Debi
about that in just a moment. The number is eight
hundred and eighty ten eighty text you know the text
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Speaker 1 (29:58):
Helping you to get on top of your busy life.
Tim Beveridge on the Weekend Collector News Talk SETB.
Speaker 2 (30:04):
And my guest is from the property Apprentice, Debbie Roberts. Debbie,
let's just quickly talk about the top sort of houses
that are not being built or the increasing number of
people just in one person residences. I mean, is there
if you're an investor, I must admit I just sort
of think without being an investor, I want definitely three
(30:26):
bedrooms minimum. Is that why we're not really building a
lot of one on two bedrooms or is there a
space for movement there?
Speaker 4 (30:33):
I think there's definitely space for movement. With the changing demographics,
you know, we are seeing more people living alone or
just one or two people, and you know, one bedroom
properties is more than enough for a lot of people,
and it's certainly one way with developers building one and
two bedroom properties. It's a way that we're going to
see prices, you know, getting reasonable for first time buyers.
(30:56):
Like first time buyers don't necessarily need a three bedroom
house or want one.
Speaker 2 (31:01):
Of course, you're not going to get a house, are you.
You're going to be getting a uni or own apartment?
Speaker 4 (31:06):
Well potentially, I.
Speaker 2 (31:06):
Mean who would. I mean, you wouldn't have a piece
of land where you've got a house and you just go, no,
let's just make it the one bedroom. Thanks, make it
a big one. But it's just one.
Speaker 4 (31:15):
Exactly, I mean. And this is one of the reasons
that the government's looking at introducing the granny flat, you know,
the proposal where you can add an extra dwelling.
Speaker 2 (31:23):
The sixty square meter thing, yeah, exactly, that's a monster.
Speaker 4 (31:27):
Square meters is a decent size. The first property we
purchased was an eighty square meter two bedroom house and
we thought it was great. It was on four hundred
square meters of land.
Speaker 2 (31:36):
What are the old workers cottages that Ponsibly used to
be before it became the trendy place. They still are
sort of that size, but they've just been spruced up
a bit.
Speaker 4 (31:46):
Yeah, I don't know. I think it's good that the
developers are starting to make you know, one in bedroom,
one and two bedroom properties because it does give people
a bit more choice. You know, not everyone wants to
have borders or flatmates or to.
Speaker 2 (31:59):
Pay off the rent. Of course, you've just made a
case for actually having a larger property because so well,
now for that extra bedroom out.
Speaker 4 (32:05):
And potentially, yeah, but not everyone wants to do that.
So and when it comes to buying investment properties, you
need to think about what tenants in the area look
for because so some areas there's no demand for one
and two bedroom properties because they're multi generational families. They
want to you know, they want five or six bedroom
houses to rent all properties with a sleepout that you
(32:27):
know that adult kids can live in. So it depends
on the area that you're investing in. You wouldn't buy
a five bedroom house in an area where there was
demand for one bedroom and two bedroom properties.
Speaker 2 (32:37):
Because an vice, because I mean, they're still not building
a lot of one or two bedroom places, are they,
I mean, unless, of course it's retirement villages, which probably
specialize in one or two bedrooms.
Speaker 4 (32:48):
Yeah, there's lots of townhouses that were built in the
last couple of years that were one and two bedrooms.
So yeah, and in some areas there's an oversupply of
those in the rental market now. So you know you
do it because a lot of them all came to
the market at the same time. They all came at
completion at the same time time everyone's looking for tenants
for one and two bedroom property. So you do have
(33:08):
to actually do some homework before you purchase an investment property.
Not every property is a good investment.
Speaker 2 (33:15):
That actually is quite a good question we could probably
explore another time as to how much how long it
takes you to do your homework on because I mean,
homeworker is a never ending, never any journey, really when
it comes to understanding what the property market is. But
if you were looking for an investment property, how much
home would you need to do? It's that's probably what's
(33:37):
why I've never done it. It just feels endless.
Speaker 4 (33:39):
It's probably the toughest decision that a new investor has
to make, and that's where having some help along that
journey can make things a little bit easier, you know.
I mean, we've got access to a whole bunch of
information that helps people make decisions and based on their
financial position and how much they can borrow. There's so
(34:00):
many different things that come into it.
Speaker 2 (34:01):
So, by the way, that when where were in the
document that we put together for the show, and we've
just got the summary of things around the number of
households one hundred and twenty thousand, one person households over
the past decade, and it says, but only thirty percent
of new builds a one or two bedroom. I actually
don't mind telling you, I'm surprised that it's as much
(34:22):
as thirty percent, because I would have thought that's still
the bulk of most construction requirements, unless it's just multi
story apartments, I guess, but a lot of the investment
would still be in people building three bedroom homes or
not all three or four bedroom I don't know.
Speaker 4 (34:35):
If you look around Auckland and look around christ Church,
there's a whole bunch of one and two bedroom properties
being built.
Speaker 2 (34:41):
So would you invest in a one or two bedroom property.
Speaker 4 (34:44):
If there was demand from tenants? There? Absolutely?
Speaker 2 (34:46):
And how would you work out a first demand from
tenants there?
Speaker 4 (34:49):
Took to a good property manager in the area. They
know what people are looking for.
Speaker 2 (34:53):
I think we might have to save that question about
how much homework you need to do because a lot
of people who listen to a show like this, you know,
there'll be people who've got an active interest in investment,
but there are people probably like me you who have
thought one need to do it at some stage. You
need to do it at some stage, but really haven't
got beyond I mean, I do a property show every week,
but haven't got beyond that sort of skirting around the
(35:15):
edges and knowing a little bit about nothing, well a
lot about very little bit, you know what I mean?
And actually how much due diligence you really need to
do on that journey to buying that first investment property.
Speaker 4 (35:27):
So I mean there is quite a few things that
you need to check out to make sure that you're
not buying a lemon. So like a building inspection. You know,
once you've got a property under contract, you've got to
do a building inspection in my opinion, even if it's
a new build, get drug tests done if you're going
to rent it out.
Speaker 2 (35:45):
Well, that's just a checklist on practicality, forgetting the money,
forgetting the actual whole investment equation and prediction.
Speaker 4 (35:52):
I mean investing in properties, not rocket science. This is
the thing, but it's like most people don't know how
to do it because they've never done it before.
Speaker 2 (35:59):
And that's where a property apprentice comes in, of course. Yeah. Actually,
just few texts before we head to the break High
to Mike Blackburn, hair, I write, I think it might
be wrote, I write the Canterbory construction report. Here in
christ Churche, approximately seventy percent of all new dwellings consented
are smaller multi units with an average floor size of
(36:21):
eighty six square meters. Okay, that's good. I wonder what
amongst those smaller units. I keep on thinking it's just
retirement villagers. Actually only because I've seen a few retirement
villages when I'm down there getting built and I think, gosh,
that's expanding.
Speaker 4 (36:35):
You know, a lot of the new builds have been
targeting property investors because you know, with the previous government,
obviously new builds had tax benefits for property investors if
they were new build versus existing. So that's all changed now.
You know, those tax benefits for new build over existing
is disappearing quickly. So yeah, these I think things are
(36:59):
going to get a lot more stable in the investment market,
but certainly some areas have gotten over supply for rental properties.
Speaker 2 (37:06):
Right, We're gonna take a quick break, come back and
just to take the one roof property of the week.
As next it's ten minutes to five news talks. He'd be.
Speaker 3 (37:22):
A honey bug.
Speaker 2 (37:25):
Maybe under you take nowhere and welcome back to the
Weekend Collective. I'm Tim Beverage. My guest is DeBie Roberts
from Property Prentice. That is Property Apprentice dot co dot Nz.
Right now it is just gone seven minutes to five.
Speaker 1 (37:49):
The one roof property of the week on the Weekend Collective.
Speaker 2 (37:53):
Yes, the one roof property of the week is They're
always gorgeous, so I'm not gonna repeat myself. It is
so go and have a look for this on the
one Roof website One roof dot co dot Nz. It's
thirty three c Titty Mowana Terrace on a Keywa in Marlborough.
The asking price is, I mean, it's a lot of money,
(38:13):
but it's not a lot of money for Auckland people.
Nine hundred and thirty thousand dollars. Although it's one bedroom,
one bedroom, one bathroom, two car covered shed. Actually it's
the shed I quite like. It's got a nice collection
of firewood in there. It's situated on a prime ridge
line overlooking the expanse of un Keywa area and it's
(38:35):
a charming home offering incredible views down the length of
Queen Charlotte sound gorgeous lookout at The completely off grid
property features a new solar power system, clear water septic
system and a new backup generator and it's described as
being low maintenance, ideal for both holiday retreats and permanent living.
Probably more off the grid for permanent living than I fancy,
(38:57):
but DeBie. We share our probably the week with my
guess and Debbie Roberts. It is a I mean, picturesque,
gorgeous isn't it beautiful view?
Speaker 4 (39:03):
And it's on thirty two point four two hectares, so
you know, if you don't want to live in the
tiny little house that's there at the moment, build something.
Speaker 2 (39:11):
Yeah, it is gorgeous look and obviously the photography is
done on a beautiful day. But down to them and
the sounds, you just can't beat it. They do have
looks like a bath that might be heated up heat,
might be heated up by fire, one of those things
that looks good in a brochure. But I'm not sure
I every want to go to the chore of lighting
it and boiling myself alive.
Speaker 4 (39:31):
It looks pretty secluded that bath, though, yes.
Speaker 2 (39:34):
It does well. It's just as well because generally when
one is in the bath, one is nudies generally.
Speaker 1 (39:39):
Yes.
Speaker 2 (39:40):
Anyway, Hey, hey did it ever? Quick text? Somebody's just
asking why they still stress testing at nine percent? Any
comments on that?
Speaker 4 (39:47):
Oh, so stress tests are definitely coming down. So most
of the banks are now stress testing between eight and
eight and a half percent now, so yeah, it's definitely
getting easier. But you know, a couple of weeks ago
it was eight point five to eight point seventy five
stress tests. So yeah, it's definitely definitely coming down.
Speaker 2 (40:07):
And just once again, by the way, if you if
you want to check out that property of one with
probably the week I'm still grazing through the photos of
a little bit thirty three C two Mowana terracet Anakiwa,
Marlborough and Debbie. Nice to see you. Good to know
you're working hard and keeping yourself busy.
Speaker 4 (40:24):
Keeping out of trouble.
Speaker 2 (40:25):
Yep, we'll catch you again. Okay. If you've missed any
of the previous hour discussion about the ocr and smaller dwellings,
go and check out the podcast. Look for the Weekend
Collective on iHeartRadio. We'll be back very shortly. The Parents
Squad Catherine Burkitt's with us and how far you know
the term is starting tomorrow. Kids are going to be
into the study pretty soon. Do you need to ride
(40:48):
them and nag them to get there, do their homework
and their study? You just leave them to make their
own mistakes. We'll be talking about that in the Parents
Squad very shortly. News Talks.
Speaker 3 (40:54):
He'd be.
Speaker 1 (40:58):
For more from the Weekend Collective. Listen live to news Talks.
It'd be weekends from three pm, or follow the podcast
on iHeartRadio
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