Numpty-nomics

Olly Newland is usually much better than the inanity that he is quoted as uttering in todays HoS.

Veteran investor Olly Newland says he is scandalised by the fees banks charge struggling homeowners seeking to move from fixed to lower floating rates. He says it’s an outrage that banks making multi-million dollar profits prefer to drive people to the wall than give them a break.

“They’re just merciless – and they’re supposed to share the pain.”

Olly would know bettter than most the law surrounding contracts and that is what a mortgage is, a contract. A fixed rate mortgage is a contract to supply you with money at a fixed interest rate for a fixed amount of time.

This is now where we get to numpty-nomics. The Numpties out there fix their loan rates generally when interest rates are on the rise as teh reserve Bank increases rates to counter inflation. Then when rates start to drop these numpties want to all jump ship to lower interest rates. In legal terms what they want to do is break their contract with the bank.

That is when we get these stupid stories about numpties hurting and crying as they struggle with their high interst rates. Interst rates, mind you, that they were perfectly happy with until everyone elses started dropping.

You also didn’t hear them clamouring to break their contracts and get higher rates when they were on lower ones did you? Not bloody likely….then the bank had to suck it up.

Olly Newland seems to want the bank to suck it up on this one too. Well fuck them and all the other numpty borrowers…..as Cactus would say RTFC. Read The Fucking Contract.

It is ironic that it is Kiwibank’s Bruce Thompson that has to explain numpty-nomics to the paper and to the masses.

break costs are a transfer of actual costs from the bank to the customer who is seeking to break the contract. Not passing on the costs is a direct loss to the bank.

“The bank takes out its own contract to finance the loan and if you break your contract, then the bank contract must also be paid out.”

Exactly.

  • bill hicks

    olly newland olson should keep cool to after school,cookie bear was the master of numpty-nomics when he worked for hudsons

  • Zutroy

    Of course banks will have enormous discretion to refinance clients into more affordable mortgage rates, and would be well advised to do so whre it is obvious they could lose the business through the client going elsewhere, or the client going under.

     

    Refinance fees do make sense when you consider

    - that hiring a specialist to draft mortgage conditions etc costs money

    - finance has been easy so people can shop around easily.

     

    Newland would have been wiser to tell people to ask for a deal from their bank on a fees reduction to finance, particularly if they are feeling the pinch. Moneylenders tend to be rational, after all.

     

     

     

  • JC

    On interest rates in general, and the complaint that the banks are keeping the rates up..

    What do you think would have happened over the last 4-5 years if an unfettered Don Brash were still in charge of the Reserve Bank?

    … exactly! Now you know why the banks are keeping an extra margin for risk:)

    JC

95%