Everyone has got to be kidding me. Now is the perfect time to buy. It's bee a long time since rates have ever been this low, with houses still producing great rental return. If your a keen investor and you look properly, there are some great deals out and about that are almost if not positively geared.

In BNZ's defence, I have banked with them for many years, and they have never let me down. The bank's haven't dealt everyone a cruel hand, it's the economy!

And yet the banks are making increased profits - the buggers are creaming us all!

Concerned Reader - Tony is right and you obviously were asleep during your Interest Rates lecture.

A "Percentage Point" is the equivalent of 0.01%.

If, as you say, the Fed had cut its rate by 5.25 percentage points, they would have cut rates by 0.0525%...which is obviously wrong.

"It now costs us banks far more to borrow money than in the past because of the huge losses racked up by the Northern Hemisphere banks."

Why does it cost them more to borrow, they can get it from the reserve bank at 0.5% interest. Isn't that the point of a reserve bank?

Maybe I'm missing something...

"*Tony Alexander is BNZ's chief economist."

And yet Tony Alexander doesn't distinguish between a percent cut and percentage points cut.

E.g. "This is why in the United States, even though the Fed has cut its cash rate 5.25 percent, mortgage interest rates have only fallen 1.0 percent to 1.5 percent."

WRONG. 5.25 percentage points. And 1 to 1.5 percentage points. This is completely different to a cut of 5.25% (and 1 to 1.5%). One is huge, the other tiny.

1. This BNZ suggestion to lock in fixed is diametrically opposed to that of Westpac Bank who have been suggesting floating rates in their weekly commentary for the last four months. Who should one beleive ?

2.Clearly, since Rob Muldoons days we have become part of a world financial economy. Presumably, our (Australian owned) banks compete with other banks from USA and UK to borrow funds on the world stage.

US 15-year retail fixed-rate mortgages averaged 4.51 percent in the latest week. One-year adjustable-rate mortgages, or ARMs, rose to an average of 4.78 percent from 4.77 percent last week. Source : CNN.com

UK fixed rates seem to vary from 2.5% up to 4.5%. Variable from 3.5 to 4.5%; much lower than ours. However their bank rate is 0.5% so perhaps they work from the same text book as our guys.

I wish someone would explain where Mr Bollards responsibilities and influence stops and Mr Key or Mr English's starts on this one ?

"As the world growth outlook becomes less bad investors move funds into shares.

Where does the money come from? Cash and fixed interest investments.

This means fewer funds available to borrow, which pushes up wholesale interest rates"

Tony, there is no actual money in the share market. Apart from initial offerings and the like, when someone buys shares that money goes to the seller - it has now left the market.

This talk of a mountain of cash on the sidelines is complete nonsense.

Cheers, David.

When you are part of a cartel that controls a monopoly why would you reduce rates?

We're halfway to saving to buy a house freehold because the banking situation in New Zealand has become so pathetic, just like the property market.

We'd rather not have the stress of worrying about what the banks are scheming here because its all decided in Australia.

And we know that despite all the media hype property here won't be a sound investment again until 2013, which suits our savings plan perfectly.

Anyone with half a brain knows there won't "any kind" of recovery here until the US is back on its feet again. So for the wise, pay off all your debt and start saving... make the banks work for their money instead of being a slave to their mood swings.

The article is fundamentaly correct as are some of the comments, however the underlying drivers of the profits for most of the banks/finance institutions perhaps aren't as well understood as they should be. If you were to look at recent results of banks and ascertain how they are brought about you will tend to see that as a general rule the retail side of a bank is running at/or about $0 or a loss while their trading division's are the ones making the profits by way of margin trading, currency etc. The cost of wholesale funding for banks and the similar has increased significantly resulting in the inability to pass on the OCR cuts fully. This is mostly due to the amount of money borrowed from offshore to fund NZer's appetite for debt. If banks simply lent out money that they took in then it would potentially be a different story. This unfortunately may get worse before better as well if NZ's credit rating is reduced as some fear. It would then mean that bank's will pay more again for their wholesale funding lines resulting in increases to the customer. Simple solution is stop borrowing so much, NZer's invest in NZ to enable banks to not require offshore funding lines and allow a balance back in the market.