House Prices

There can be life in dead money - Mary Holm

Q: I rent my home and keep savings in the bank (a potential house deposit, because isn't buying a house what we're all supposed to do?) and often hear the "rent is dead money" comment from friends and colleagues who have already bought a home and are paying off a mortgage.

But surely the hundreds of thousands of dollars people pay in interest over the term of their mortgage is

Monday, October 04th 2004

just as "deceased"?

I often wonder if there is a way of comparing the "rent-and-invest versus mortgage" decision 15 years into the future.

Say, Joe Bloggs has $170,000 from late Aunty Betty which he puts into long-term government bonds (or maybe some in cash, some in index funds), and pays $300 rent a week, whereas his sister Josephine uses her $170,000 as a deposit on a $340,000 house, with a 15-year mortgage.

Maths was never my strong point, but with vague recollections of net present value calculations, maybe you can help.

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Heartland Bank - Online	6.69
SBS FirstHome Combo	6.74
Wairarapa Building Society	6.95
Unity	6.99
Co-operative Bank - First Home Special	7.04
ICBC	7.05
China Construction Bank	7.09
BNZ - Classic	7.24
ASB Bank	7.24
ANZ Special	7.24
TSB Special	7.24

Unity First Home Buyer special	6.45
Heartland Bank - Online	6.45
SBS Bank Special	6.69
TSB Special	6.75
Westpac Special	6.75
China Construction Bank	6.75
ICBC	6.75
AIA - Go Home Loans	6.75
ASB Bank	6.75
Unity	6.79
Co-operative Bank - Owner Occ	6.79

SBS Bank Special	6.19
ASB Bank	6.39
Westpac Special	6.39
AIA - Go Home Loans	6.39
China Construction Bank	6.40
ICBC	6.49
Kiwibank Special	6.55
BNZ - Classic	6.55
Co-operative Bank - Owner Occ	6.55
TSB Special	6.59
SBS Bank	6.79

SBS FirstHome Combo	6.19
AIA - Back My Build	6.19
ANZ Blueprint to Build	7.39
Credit Union Auckland	7.70
ICBC	7.85
Heartland Bank - Online	7.99
Pepper Money Essential	8.29
Co-operative Bank - Owner Occ	8.40
Co-operative Bank - Standard	8.40
First Credit Union Standard	8.50
Kiwibank	8.50