This setup seems to take advantage of the available financing and incentives in both countries. There is zero debt against my Aussie house. That said it would generate positive cash if rented so probably not necessary unless depreciation is really significant. If I ever move back then I could probably deduct any US home losses from current Oz income. Opposite of Australia where your primary home is not deductible but your investment property is. They would instead accumulate until the asset is sold, at which point you can deduct from income until it’s used up (I think). By contrast, based on my income, losses on an investment property couldn’t offset US earned income in the current year. 2.75% fixed for 30 years and fully tax deductible while inflation runs 7 to 8% is “once in a lifetime” stuff. It’s on a primary residence, so interest is fully tax deductible. I could pay it off or refi any time with zero penalty. My US mortgage is fixed for 30 years at 2.75%. read more via hyperlink above … Log in to Reply The very longest fixed rate offered in New Zealand by the country’s largest bank ANZ is a five-year loan for 7.09%, and ANZ’s popular two-year rate for people with at least 20% equity in their homes is 6.45%.Īnd unlike in New Zealand, fixed rate mortgages in the US don’t come with huge break fees if you want to make a change so people aren’t worried about fixing for longer, says Susan Templeton, a mortgage broker in Auckland who worked for more than a decade as a broker in the US.Ĭompetition is so fierce over there she had 300 lenders fighting to lend to her clients…. With a 15-year fixed rate home loan from US bank Wells Fargo, a borrower could lock themselves in an interest rate of 5.5%, and get on with paying their loan off. Here’s why US home loan borrowers can fix for 30 years, and we can’t … Rob Stock … Stuff NZ That includes British banks rewarding borrowers who have done well paying down their home loans with lower rates for being less risky borrowers. It is not just across-the-board lower rates for British and Australian borrowers compared to those available in New Zealand, but banks overseas have different pricing practices that could save some a lot of money. Kiwis pay home loan interest rates others ‘wouldn’t touch with a barge pole … Rob Stock … Stuff NZĪNALYSIS: New Zealand borrowers are paying home loan rates borrowers in Australia and the United Kingdom “wouldn’t touch with a barge pole”. If it continues to tighten over the months ahead, it risks plunging the economy into a consumer-led recession. Given the size of the monetary tightening to come, which comes at a time when the economy is slowing and unemployment is rising, the RBA is playing with fire on interest rates. The next chart from Morgan Stanley highlights the extent of this fixed rate “mortgage cliff”, with the volume of fixed rate mortgages expiring rising precipitously from April, peaking in May, and then remaining at high levels for the remainder of the year: Nearly 900,000 borrowers, or 23% of Australia’s total mortgage book, will this year switch from these cheap pandemic fixed rates to variable mortgages with rates that are more than double current levels. This is a worrying prospect, given monetary conditions will tighten significantly even without further rate hikes from the RBA.Īccording to RBA’s own estimates, around one third of all home loan borrowers are on fixed mortgages, many of which were originated over the pandemic at rates of around 2%: While the minutes accompanying Tuesday’s decision took a more dovish tone, the RBA indicated that interest rates will rise further in the months ahead. The impact on mortgage holders has been brutal, with average variable mortgage repayments soaring 43% from their pre-pandemic level, adding around $900 in monthly mortgage repayments on a typical $500,000 mortgage: The increase in the OCR has more than doubled average owner-occupier variable mortgage rates from 2.9% in April 2022 to 5.9%: This brought the OCR to 3.60%, its highest level since 2012:
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