The main reason I can think of that it might not work is because revolving
credit mortgages would get around it - your 1% extra repayment would be
instantly available again. But in theory I think it is a great idea.
I don't think this is necessarily the case, you'd just have to limit how much
of their mortgage they could have on revolving credit. Having your entire
mortgage on a floating rate is just dangerous anyway.
Alister Christie
Computers for People
Ph: 04 471 1849 Fax: 04 471 1266
http://www.salespartner.co.nz
PO Box 13085
Johnsonville
Wellington
David Brennan wrote:
What is to stop someone refinancing a year later and reborrowing the 1%
they paid off the capital the year before?
Nothing... and who cares? It's still a far better outcome than now. Their
disposable income reduces now when we need it too without them actually
losing money in the long term (in fact they gain money).
It would be a minefield to try to regulate an individual's debt/equity
ratios like that.
Whereas regulating individual's debt/equity ratios by changing the exchange
rate for the WHOLE economy is in any way better?
The main reason I can think of that it might not work is because revolving
credit mortgages would get around it - your 1% extra repayment would be
instantly available again. But in theory I think it is a great idea.
On Fri, 27 Jul 2007 11:53, David Brennan wrote:
Give that man a job!
Pity the vast bulk of the public are too short-sighted (stupid?) to accept
"cemp" because that would appear to be "government intervention" and the
government trying to hurt their pockets and steal their money (even though
it would benefit them hugely in the long run by paying their mortgage off
earlier). So instead we get a 1% base interest rate rise which hurts their
pockets just as much, doesn't benefit them... oh and just happens to lay
waste to other areas of the economy such as the export sector... Ooops!
Rant off! ;-)
-----Original Message-----
From: [EMAIL PROTECTED]
[mailto:[EMAIL PROTECTED] On Behalf Of Robert martin
Sent: Friday, 27 July 2007 11:44 a.m.
To: NZ Borland Developers Group - Offtopic List
Subject: Re: [DUG-Offtopic] RE: [DUG] basic question
Hi
Inflation is a BAD thing, when it is significantly greater than Growth
and caused by certain factors (wage / price spiral etc). It is not BAD
if your economy is growing and it is being caused by factors that the
economy has no control over (petrol prices for example).
The idea of looking a housing and saying it is causing to much inflation
yet ignoring fuel prices (which push up the price of everything) is
patently ridiculous. As is excluding Interest rates from the inflation
calculation.
There are better tools to control inflation that economists don't talk
about because they (generally) work for banks. For example what if we
had a compulsary extra mortagage payment percentage (cemp). So instead
of raising the general interest rate, add say 1% to the cemp. This
extra payment would go to the persons mortgage (paying it off faster,
and actually benefit the person), be immediate (not have a 2 yr lag) and
help savings. this would acheive the same thing as raising general
interest rates (make people have less money to spend). The only people
who would loose would be...... the banks.
The other thing is that GDP should be factored in to inflation calcs.
I.e if GDP is 5% (wouldn't that be nice), an inflation rate of 3.5%
wouldn't mean that the reserve bank needed to put the brakes on.
Rob Martin
Software Engineer
phone +64 03 377 0495
fax +64 03 377 0496
web www.chreos.com
Wild Software Ltd
Phil Scadden wrote:
And inflation is a BAD thing. The problem for government is how to
reduce
consumer spending. OCR is very crude tool but other measures (limit
overseas investment, capital gains tax, etc are dubious and very hard to
parlimentary support for). Kiwisaver MIGHT reduce expenditure but I'll
bet sharemarket soars as fundmanagers desparately try to find places to
invest will in turn put more pressure on dollar. Shame government
didn't
have to balls to tackle the property market 3 years ago.
----------------------------------------------------------
Phil Scadden, GNS Science Ltd
764 Cumberland St, Private Bag 1930, Dunedin, New Zealand
Ph +64 3 4799663, fax +64 3 477 5232
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