Mortgages

Beware of too much sharing - Mary Holm

Q. I was just wondering, what do the banks do with all the money in their coffers when we stop buying houses and bonds and leave it with them instead on fixed deposit because the interest is so good?

A. In many ways, money is just another commodity rather like, let's say, trailers that are towed behind cars.

When you deposit money with a bank, it's as if you

Saturday, August 21st 2004

're letting them use your trailer for a while in exchange for your hiring fee - the interest they pay you.

The bank has a yard full of trailers (deposits). In turn, it hires them out to people who need trailers (mortgages). It charges them a larger hiring fee (mortgage interest) than it gives you, to cover its costs and give it a profit.

What happens if more people want to rent out their trailers to the bank and fewer people want to hire trailers - which is your scenario?

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Unity First Home Buyer special 3.99
ICBC 4.25
SBS FirstHome Combo 4.29
Co-operative Bank - First Home Special 4.35
TSB Special 4.39
Co-operative Bank - Owner Occ 4.45
ANZ Special 4.49
ASB Bank 4.49
SBS Bank Special 4.49
Unity Special 4.49
Westpac Special 4.49
Westpac Special 4.45
SBS Bank Special 4.49
BNZ - Std 4.49
Kiwibank Special 4.49
TSB Special 4.49
AIA - Go Home Loans 4.49
ANZ Special 4.49
ASB Bank 4.49
Co-operative Bank - Owner Occ 4.49
ICBC 4.59
Wairarapa Building Society 4.59
SBS Bank Special 4.99
Westpac Special 4.99
ICBC 4.99
BNZ - Std 4.99
AIA - Go Home Loans 5.15
ASB Bank 5.15
Co-operative Bank - Owner Occ 5.19
ANZ 5.39
TSB Special 5.39
Kiwibank Special 5.39
Kainga Ora 5.49
SBS FirstHome Combo 3.44
AIA - Back My Build 3.54
SBS Construction lending for FHB 3.74
CFML 321 Loans 4.25
Co-operative Bank - Owner Occ 5.30
Co-operative Bank - Standard 5.30
ICBC 5.39
Heartland Bank - Online 5.45
Kiwibank - Offset 5.80
Kiwibank 5.80
ANZ 5.89

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