> 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: offtopic-bounces@delp...
>> [mailto:offtopic-bounces@delp...] 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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>>
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