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Mortgage pain: Nelson family consider selling after $2500 monthly interest rate rise ‘brings tears to my eyes’

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Aaron and Jessica Rubin are on the brink of selling their house.

They’re battling to pay the bills for their family of two kids now rising interest rates have led their home loan payments to jump by about $2500 a month in just two years.

The couple bought their Nelson home for $1.2 million in 2021, taking out a more than $1m loan with one of the big four banks.

Initially, they paid about $4000 a month in home loan repayments. But when their one-year fixed term ended, payments jumped to $5142 a month on a refinanced 3.99 percent rate.

Now payments are set to hit $6710 in March – a $1600 year-on-year jump – should they sign on for the bank’s new 6.49 percent fixed term.

Aaron said home ownership was supposed to be a big step forward for the United States-born couple’s family, instead the speed of rate rises makes it feel like they’re “falling behind”.

“Honestly, we’ve been talking about just selling up.

“We could go back to renting and saving $500-$600 a week to save up for another house.

“Why would we keep putting money in the bank’s pocket.”

With new data showing Kiwis are facing further rising cost of living rises, the pressure on home owners, like the Rubins, was only expected to grow.

Inflation was continuing its upward march with the consumer price index jumping 7.2 percent in the 12 months to December, Stats NZ said today.

This followed similar jumps in the September and June quarters, it said.

Key contributors to the new inflation figure are rising rents, food expenses, and the cost of building new homes, CoreLogic chief property economist Kelvin Davidson said.

He said it’s not “cut and dried” what the new inflation figure will mean for interest rates. However, it is most likely to lead the Reserve Bank to raise the Official Cash Rate by 0.75 per cent in February.

That will in turn likely lead banks to bump up their home loan interest rates even further.

‘Lining the bank’s pockets’

But that prospect frustrates Aaron, who believes the banks are greedy.

“The most disconcerting thing is that [rising interest rates] is all going to make the banks richer,” he said.

“They were already super wealthy, there’s already a gap between the wealthy and the poor, and this is just really cementing that gap.”

He said while the official inflation figure was 7.2 percent over the past 12 months, his monthly home loan repayments had jumped 31 percent in dollar terms in one year.

When taken over two years, his monthly repayments are now set to be roughly about 68 percent higher.

And despite the size of his upcoming $6710 monthly repayments, he said most of his payments in the early years of the loan simply covered interest.

“A very small amount is going to our principal and an amazing majority of the payment is going toward interest, just lining the pockets of the banks.”

It brought tears to his eyes, but his family is now considering selling their home, he said.

It may mean they have to sell for less than what they paid, but Aaron believed the extra money they save renting could help them save for their next house and come out ahead rather than paying so much cash to the banks.

Raising a family in New Zealand has been the ambition of the Rubins ever since they first visited 15 years ago.

Eventually arriving seven years ago, they first lived in Auckland, where it was incredibly hard to save, before moving to Nelson about four years ago.

“We’re very outdoorsy people, we like tramping and kayaking – it’s also an incredibly friendly country, everybody is super kind and generous,” Aaron said.

But sadly, ultra-high house prices and the strain put on young families trying to pay home loans put a sour note on the family’s love affair with New Zealand, he said.

’30-year fixed rate home loans’

One thing Aaron hoped could be imported from his native United States was 30-year fixed rate home loans.

Close to 90 percent of new homes in the US are currently bought using 30-year terms.

In 2021, US home buyers could sign onto 30-year homes loans on rates as low as 3 percent, although current rates have climbed closer to 6 percent.

The long terms gave certainty because the weekly payments are more affordable, he said.

“You can start budgeting more accordingly, you can you can start saving for your retirement, you can buy groceries without having to worry about whether you can’t pay your electricity.”

The US market also allows people who signed on to 30-year terms at moments when interest rates were high, to later refinance on lower rates by paying refinance fees but not facing paying penalty payments for changing home loan providers before the loan has been paid off, he said.

The 30-year fixed rate loans only came about in the US as a result of government intervention, highlighting that their are things governments can do to help families, he said.

“I’m calling on the government to look into all the ways it can help.”

– This story was first published on NZ Herald

Source – RNZ

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Police say person who fired gun at officers still at large

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Police say a person who fired a gun at officers in Napier is still at large.

Eastern District Commander Superintendent Joel Lamb said Police tried to stop a vehicle in the Pirimai Area at about 10pm on Tuesday.

He said someone in the back seat pointed what was presumed to be a firearm at officers pursuing the vehicle.

“Staff have then heard two distinct gunshots as the firearm was discharged.

“Fortunately, neither of our officers were injured, and the patrol vehicle did not sustain any damage.”

He said hours later, the vehicle was seen travelling north on the Waikato Expressway towards Auckland.

Police seized the vehicle at an address in Manurewa, but they had not found the alleged offender.

Lamb said people who lived at the Manurewa address were engaging with Police.

He said Eastern District and Counties Manukau Police were making enquiries.

“Presenting a firearm at a Police officer is a serious escalation that puts our staff and the wider community at risk. This behaviour is entirely unacceptable.

“We are taking this incident extremely seriously and will be pursuing all lines of enquiry to locate the offender and hold them accountable.”

Police asked anyone who witnessed the incident to contact Police on 105 or online using the reference number 261111/3764.

Information could also be provided anonymously via Crime Stoppers on 0800 555 111.

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New Zealand sides named for RLWC finals

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The players tasked with ending Australia’s Rugby League World Cup dominance have been named.

The Kiwis and Kiwi Ferns have announced their squads for this Sunday’s World Cup finals in Brisbane.

Both sides are chasing their first titles since 2008, and both are looking to end their opponents run of three crowns in a row.

“Our Kiwi Ferns have been so dominant in years gone by, and we want to bring dominance back to this jersey, so I think it will be a case of who wants it more,” said co-captain Georgia Hale of the impending clash.

The Kiwis get a major boost for the final as they welcome back Ronaldo Mulitalo after he served a one-match ban for a high tackle against Fiji Bati.

Mulitalo replaces Charnze Nicoll-Klokstad, who moves to the six-man bench, which again includes utility Te Maire Martin, middle forwards Naufahu Whyte, Erin Clark and Xavier Willison plus fullback Keano Kini.

Loose forward Joseph Tapine will make his 30th Test appearance in a familiar pack again, including second-rowers Isaiah Papali’i and Briton Nikora, and props James Fisher-Harris and Moses Leota.

Winger Jamayne Isaako is on the cusp of claiming the New Zealand record for most Test points.

His five goals against Tonga lifted his career points tally to 225 – level with Shaun Johnson – while centre Casey McLean goes into the final with 16 tries in just eight Tests.

Fisher-Harris will again captain the team.

Fullback Ponga said the goal of the group was clear.

“We have high expectations around what we want to achieve, and obviously winning a world Cup is one of them.”

Meanwhile, Ricky Henry has selected a settled side to take on the Jillaroos, led by their lethal centre combination of Stacey Waaka and Mele Hufanga.

Veteran Apii Nicholls takes the number one jersey, Leianne Tufuga and Mackenzie Wiki on the wings.

Henry has stuck with his halves pairing of Chantay Kiria-Ratu and Raecene McGregor with Alexis Tauaneai, Georgia Hale and Otesa Pule up front.

Rounding out the starting pack is Shaniece Monschau, Kaiyah Atai, and Angelina Teakaraanga-Katoa.

“We have been building well throughout the tournament; we understand the Jillaroos side, and will give it our all to make New Zealand proud this weekend,” said Henry.

RLWC Finals:

Kiwi Ferns vs Jillaroos- 6.10pm

Kiwis vs Kangaroos – 9.35pm

Sunday November 15

Suncorp Stadium, Brisbane

Live blog updates on RNZ

Kiwi Ferns:

1. Apii Nicholls 2. Leianne Tufuga 3. Mele Hufanga 4. Stacey Waaka 5. Mackenzie Wiki 6. Chantay Kiria-Ratu 7. Raecene McGregor 8. Alexis Tauaneai 9. Georgia Hale 10. Otesa Pule 11. Shaniece Monschau 12. Kaiyah Atai 13. Angelina Teakaraanga-Katoa.

Interchange: 14. Ashleigh Quinlan 15. Annessa Biddle 16. Shannon Mato 17. Ivana Lauitiiti.

Reserves: 18. Brooke Anderson 19. Zahara Temara 20. Brianna Clark 21. Abigail Roache 22. Tenika Willison.

Kiwis:

1. Kalyn Ponga, 2. Jamayne Isaako, 3. Dane Gagai, 4. Casey McLean, 5. Ronaldo Mulitalo, 6. Kodi Nikorima, 7. Jahrome Hughes, 8. James Fisher-Harris (c), 9. Jeremy Marshall-King, 10. Moses Leota, 11. Isaiah Papali’i, 12. Briton Nikora, 13. Joseph Tapine (v/c).

Interchange: 14. Te Maire Martin, 15. Naufahu Whyte, 16. Erin Clark, 17. Xavier Willison.

Reserves: 18. Keano Kini, 19. Phoenix Crossland, 20. Charnze Nicoll-Klokstad, 21. Scott Sorensen, 22. Leo Thompson.

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Opportunities to mitigate multi-million-dollar RNZ budget blowout likely missed – experts

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Multiple opportunities to identify and mitigate a multi-million-dollar budget blowout at RNZ appear have been missed, according to the former executive director at Audit New Zealand.

The public broadcaster on Monday revealed a near $12 million shock financial loss after a litany of financial blunders, which will now lead to sweeping job cuts.

The $11.8m loss is more than 25 times the $470,000 RNZ had expected to lose over the year to June.

CEO Paul Thompson took responsibility for the result, and said internal reports gave an inaccurate picture of the finances, meaning the scale of the loss only became clear in October.

RNZ’s former chief financial officer Hilary Parker resigned unexpectedly in early October.

The board said it would commission an independent review into what went wrong.

Independent contractor Stephen Walker, who left the Audit Office earlier this year, said the size of the loss was surprising, as was the length of time it took to identify it – months after the financial year ended.

Stephen Walker.
Independent contractor Stephen Walker is a former executive director at Audit New Zealand.

Supplied / OAG

“Probably more of a concern is that they had seemingly been unaware that they were running up a significant deficit until they were in the preparation stage of their annual report in October.”

Walker said public entities typically produced monthly financial reports.

An interim audit also took place before the end of the financial year, he said, but if the organisation hadn’t identified significant losses at that stage, the auditor could also be in the dark.

“It seems that there’s a real weakness in forecasting and budgeting that’s occurred here and that the monthly accounts, when they’re produced, either haven’t identified these significant variances against budget or the magnitude of them really hasn’t come to light until right towards the end of the financial year,” Walker said.

“And really at that point, there’s no opportunity for the chief executive, the leadership team to take, and the board to take, any corrective action because the year has effectively been completed.”

Walker said the “significant miss” was difficult to account for given it was more than 10 percent of RNZ’s total funding.

He said based on RNZ’s annual report, financial complexity didn’t appear to be a factor.

“This $11.8m loss isn’t made up of one particular item … it seems to have been contributed to by a number of separate expense lines running over budget. So I don’t think it’s necessarily to do with complexity.”

Among the errors, RNZ wrongly counted $2m from land sales as income in its budget. Staff costs also came in $3.2m over budget, including $1.4m in redundancy payments.

Professor at Auckland University’s business school Norman Wong said based on media reports the issues identified were “significant and troubling”.

Norman Wong.
Norman Wong.

Supplied / University of Auckland

“But recognising the sale of land as income in their budget is a basic error that one would have expected to have been caught and corrected well before it got to this point.”

With funding reductions at RNZ over the past two years, Walker expected greater scrutiny of financial results.

“Virtually every public entity has had their annual budget reduced. And so you would expect … the leadership team on a monthly basis and board – I’m not sure how frequently the board will consider the information – but you would expect them to be interrogating the results on a regular basis throughout the year,” he said.

Walker said initiating an independent review was the correct course of action and that he’d want to understand what information the leadership team and the board were regularly receiving.

He said he’d “love to say” surprising financial results were rare, but conceded they occured on a semi-frequent basis during his time leading the Audit Office.

“The benefit of independent scrutiny by the Audit Office – and the auditors providing that support to the Auditor General – [is] that the reporting is fairly presented at the end of the year, whether it’s good, bad or ugly.”

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