Haven't written on this in a while

Apparently, it takes a while for news to travel from the US to NZ. Why else wouldn't they understand why this stuff is a bad idea?

Working Lives: 100 per cent loan on Kiwi dream

The couple are among a growing number of first home buyers who are willingly taking on huge financial burdens by borrowing 100 per cent of the cost of their homes.

"Going back three or four years, 100 per cent mortgages were only available through non-conforming type entities and second-tier lenders," says Mortgage Brokers Association chairman Geoff Bawden.

"Now you have a situation where most, if not all, of the mainstream bank players are able to offer 100 per cent funding on reasonable terms."

Most brokers put 100 per cent loans at around 5 to 10 per cent of all new mortgages. Mike Pero Mortgages chief executive Sandra Pigram says they are 10 to 15 per cent of her business.

Westpac has recently gone further and offered to consolidate borrowers' existing debts into mortgages worth up to 110 per cent of the value of a house, although its housing product manager Mike Davy cautions: "There is no guarantee that they will get the 110 per cent mortgage and there is no formal policy around it. It's assessed on a case-by-case basis."

Easier financing has helped to push up house prices. Although brokers say they aim for mortgage payments of no more than 30 to 35 per cent of household incomes, the Reserve Bank says the average is now nudging 50 per cent.

Remember, too, that here in NZ, nearly all loans are ARMS. Many adjust after the first two years. Interest rates have been going up here, and are predicted to go up another 1 to 2 points over the coming year. Currently they are at about 10%, and inflation is coming in at about 4%, though like in the US food and gas prices have risen at a higher rate.

The news article focuses on a particular couple. They have a, uh, rosy attitude:

Mr Bowie says house prices were rising beyond their capacity to pay: "If we didn't do it soon, we probably never would have been able to afford to do it. Worst case scenario, if we had to come out in six months, hopefully we can make a bit from what we spent."

It's like a bad movie.