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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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
China Construction Bank 6.75
TSB Special 6.75
ICBC 6.75
ANZ Special 6.79
ASB Bank 6.79
AIA - Go Home Loans 6.79
Kiwibank Special 6.79
BNZ - Classic 6.79
Unity 6.79
Westpac Special 6.39
China Construction Bank 6.40
ICBC 6.49
SBS Bank Special 6.55
Kiwibank Special 6.55
BNZ - Classic 6.55
Co-operative Bank - Owner Occ 6.55
ASB Bank 6.55
AIA - Go Home Loans 6.55
TSB Special 6.59
Kainga Ora 6.99
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

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