Here are the key things you need to know before you leave work today (or if you already work from home, before you shutdown your laptop).
MORTGAGE RATE CHANGES
ANZ has trimmed -10 bps from it two year fixed rate, taking it to 6.49%. They have cut -60 bps from their three year rate to 5.99%. These changes follow Westpac (and BNZ).
TERM DEPOSIT/SAVINGS RATE CHANGES
WBS, First Credit Union, and Heretaunga Building Society all raised term deposit rates today.
A PERCENT MORE FOR HOUSEHOLDS
Statistics New Zealand said the cost of living for households rose +7.7% in the year to March 2023, boosted by higher rents and interest payments and increased grocery food, fruit and vegetables prices. This household measure is different to the general CPI which rose +6.7% in the same period. The household living costs measure ran at an annualised rate of +4.1% in the March quarter from the prior quarter, so the rate is slowing recently. (The equivalent Q1-23-from-Q4-22 annualised rate was +4.5% and also slowing.)
NEW HIGH SPOTS
New Reserve Bank mortgage figures show homeowners paid close to $4 bln in interest during the March quarter, while total scheduled repayments topped $6 bln for the first time since the RBNZ started publishing this data.
MARKET SLUMP EXTENDS
The national housing market is headed for a hard winter with stock levels up, sales down, and new listings at a record low, according to realestate.co.nz data. (We may well get the widely-watched Barfoot Auckland April data tomorrow.)
CREDIT STRESS TURNING UP
According to the Insolvency Service, there were -5% fewer personal bankruptcies in Q1-2023 than there were in Q1-2022. But there were +7.5% more No Asset Procedures on the same basis, and there were more than double the company liquidations handled by them.
INCENTIVISED BY NOMINAL RATE RISES
Total deposits at bank grew only +$666 mln in March from February according to data released by the RBNZ. That is the lowest monthly rise since 2018 and is part of a fast loss of momentum in 2023. For the year to March the rise was only +$8.8 bln also a low since their S40 series started in 2017. For households, total bank account balances rose +$10.0 bln in the year to March. That was made up of a fall in transaction account balances of -$9.4 bln, a fall in savings account balances of -$5.6 bln, and a rush into term deposits of +$25.0 bln in the year. For the month of March alone, term deposit balances grew +$2.3 bln. Households are3 very incentivised by rising term deposit rates even if after tax, after inflation they are still quite negative.
ANOTHER SCAM WARNING
CertNZ is warning about new phishing attacks. They are scams using text messages, phone calls, and emails to target New Zealanders. In some cases, these scams ask you to install remote access software to access further personal or financial information and send text messages using your device. The messages claim to be from various organisations, like your bank, Inland Revenue, NZTA, postal services, computer security software and others. The messages often claim an unusual payment was detected, tax refunds are available, you have unpaid tolls or fees requiring payment. They will contain a link to visit or a phone number to call.
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SWAP RATES SOFTISH
Wholesale swap rates are probably slightly lower today. However, the real action in swap rates comes near the close. Our chart will record the final positions. The 90 day bank bill rate is up +2 bps at 5.58% and 33 bps above the OCR. The Australian 10 year bond yield is now at 3.35% and up +8 bps from this morning. The China 10 year bond rate is unchanged at 2.79%. And the NZ Government 10 year bond rate is now at 4.07%, and that is down -7 bps from this morning, now above the earlier RBNZ fix at 4.02% which is down -10 bps from Friday. The UST 10 year yield is now at 3.45% and up +2 bps from this morning's open.
EQUITIES UP EXCEPT THE NZX
The NZX50 is down -0.3% in late trade today. The ASX200 is up +0.6% in afternoon trade. Tokyo has opened up +0.7%. Hong Kong is closed today but reopens tomorrow as normal but Shanghai will be closed until Thursday this week for its Golden Week holiday. The S&P500 futures suggest Wall Street will open tomorrow up +0.4%.
GOLD RETREATS
In early Asian trade, gold is softer from this morning, down -US$8/oz at US$1983/oz.
NZD LITTLE-CHANGED
The Kiwi dollar remains at 61.8 USc with little-change from where we opened today. Against the Aussie we are still at 93.4 AUc. And against the euro we are holding at 56.1 euro cents. That means the TWI-5 is still at 69.9.
BITCOIN FALLS
The bitcoin price has fallen further after yesterday's dip, now at US$28,647 and down -3.3% from this morning. The big drop happened at 1:30pm today. Volatility over the past 24 hours has been moderate at +/- 2.7%.
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Keep abreast of upcoming events by following our Economic Calendar here ».
103 Comments
Investors? Assets?
You mean people will be piling into debt, because spruikers - obvious ones included - have told them the party will continue?
The system has been overdrawn since BEFORE 2008. Extend, and the inevitable correction worsens.
Oh - and inflation will only lower from here on, via recession/repression.
Here you go HW. Ashley Church talking to Michael Laws about the bubble. He thinks the 'crash' is already over.
Property commentator Ashley Church on the housing market and new lending criteria
On the downside, Property Press magazine has thrown in the towel.
https://www.stuff.co.nz/business/property/131911544/property-press-stop…
Prophet Ashley reckons that the banks don't really follow the RBNZ. Make of that what you will.
Due to exponential growth, property was a TINA. There Is No Alternative; nothing is big enough to accommodate the needed growth anymore; to keep belief going in the ever-more dollars being 'worth something', there had to be a sponge big enough to soak it up. That was house-prices - numbers blown up vis-a-vis existing stuff. It hit the wall, and the can has been kicked for more than a decade.
But there are vested-interest folk who insist the recent aberration '(1800-now) is 'normal', and that we'll get back to it shortly.
I feel sorry for them, but we must remember the arrogance they emanated while things were going their way. They did no service, made no useful product; essentially parasites on a system which - because it is physically-based - had to peak and decline.
You want to work out what assets others want and be in front of them. If the recession is deep you do not want to own these yet. Developers rarely have the funding to build without banks and they left the spec market years ago. Are you calling the bottom here on the 1st May 2023 ... HW2 or are you just drunk on hopium
(Megaphone voice)
IT GUY, You paid off your mortgage, smart move, but can you get another one? Financing your next kingly move is expensive and if you want to win the game you must have cash. The CCCFA will only slow you down.
IT GUY, do you have the cash it takes to beat The Cube.
by Zachary Smith | 1st May 23, 5:18pm 1682918294
Things are definitely going to turn around and get better soon. Doomster's time in the sun is generally short lived.
'Definitely' eh?
Dis you Jim Crammer.....
bw
It is fallacy that the OCR must go above CPI for the RBNZ to achieve its target rate.
The OCR only needs to be at a level sufficient to slow inflation; the current rate is clearly slowing inflation as it increases the cost of borrowing so slowing consumer spending (ask anyone with a mortgage currently rolling over). It would appear arguably that, as stated by the RBNZ MPC, a further increase in the OCR is likely to further slow inflation, but they have never stated that the OCR must be higher than the CPI.
P8 might be right if you look back through history long enough.
Current debt/gdp ratios are more reflective of the 1940's (war time) rather than the 70's/80's.
During and just after WW2, inflation spiked and dropped (into deflation) and spiked again on numerous occasions while interest rates remained very low.
https://s3.amazonaws.com/s3.timetoast.com/public/uploads/photos/6754870…
But I also think Jerome Powell is terrified of being remember as the Arthur Burns of this generation, so he may well over do it with interest rate rises....so what will actually happen is highly uncertain - anyone who tells you they know as a something that is going to be certain or definite is happily misleading others.
What went wrong in Arthur Burns' time as Fed chair in the 1970s : NPR
They don't need to state it. If they need to convince people to keep their money in the bank, they need to raise the cash rate. Because what's happening now is, through banks, savers' wealth is slowly being transferred to people in debt, through inflation. People have their debt eroded faster than the interest they pay, and savers get compensated less than inflation.
People are well aware of this, and they won't hold more than necessary cash because of it, and because of inflation. I think a stable economy is one where the public believe their currency will hold its value for the foreseeable future, and we don't have that now. I think that's the real battle reserve banks are facing.
by HW2 | 1st May 23, 4:10pm 1682914252
Inflation is falling!! Annualised 4.1pct, down from the headline 6.7
Lock in longer TDs at 6 pct now if you can still get it.
Wouldn't they be better off buying houses now and doubling their money in 10 years time given the bottom is in?
I thought only fools like Retired Poppy put their money in term deposits? Or was it Retard Poppy (can't remember what abusive term is most popular this week to be used by spruikers).
And the biggest news of the day….
https://www.nzherald.co.nz/nz/property-press-closing-down-real-estate-m…
Here is a great headline
Meet the ‘Spud King’: His business is worth $1b but he’s still farming - ‘it’s better than sex’
https://www.nzherald.co.nz/nz/meet-the-spud-king-his-business-is-worth-…
HAHAHAHAHA - yes, I've crossed paths with her. And read her recent spin-piece in the Fed Farmers propaganda epistle (well, that's what it is; try and get a balanced article in there).
A spruiker, in the real meaning of the term.
Does a disservice to the name Professor - it used to imply more....
Correct, I have lost the link but there was a map of regional council water testing results a few years ago, and by far the highest nitrate pollution levels in the country were around Pukekohe.
I have also worked in the horticulture and fertiliser industry, and even as an industry insider, I can tell you that things are not good in the traditional growing areas.
To the credit of the larger vegetable growers though, they seem to have adopted more sustainable practices on newer land they are acquiring around the South Waikato and Central North Island for example, and seem to be using a lot less fertiliser than they use around Pukekohe.
if the wind moves forward we can drop that spinaker and pop up a big genny , sail hot angles and get 5-6% pay increases for the next 7-8 gybes 8) except that nasty Mr Orr wants us to sail upwind. Gennies don't look good upwind, rather those mentioned wage slaves will have to sit on the rail and get cold to keep the weight up. Or they go to Aussie, where they NEVER sail upwind. was it not good as the land of milk and honey https://youtu.be/RDscbVWRBCw
So of the 6 houses we have been tracking for over 2 months. Just one has sold... all in a hot area, great schools, all have ever decreasing prices. Some cancelled auctions beforehand. We keep getting calls from the REAs telling us they have bids and inviting us to offer.. but none ever seem to be taken off the market.
Bottom of the market? Thats only reached when people start to buy at the low price point it has reached and most people arent even thinking of buying in yet.
So a way to go yet i am afraid. First unemployment needs to go up and then spending needs to fall. Neither will be evident til the end of the year methinx so first we will have a very harsh winter for the REAs
Good opportunities in software now tho...
Going to be really interesting to see what way swaps/interest rates go from here.
The 1 and 2 year swaps have been flat lining in a 5 - 5.5% channel for 6 months now. EAch time they look like they are going to breakout in either direction, they recover back into that same channel.
It makes me think, Is this the new floor or the new ceiling? (I honestly don't know and think they could go in either direction from here - probably 60/40 that they will drop rather than rise further over the next 2 years).
Yes the desperation of the Spruikers on here, the bank economists saying they are revising the bottom ( their opinion of it, not the actual in the future reality), the real estate agents saying its a good time to buy as the headline on tv1 news tonight was MARKET IS AT A SNAILS PACE.... everyone is suddenly desperate to declare green shoots when the actual reality is we still have rampant inflation 3 times higher then the band, employment is holding in, and the current OCR is likely to stay or indeed even go higher. All this discounts the very real possibility of a US market meltdown. The plane can stay in the air a long time but its getting slower and slower and it needs to maintain a decent speed, least things stall from this height.
I'm just reading about US pension-funds; never funded and they started by paying-out to those who hadn't paid in. They continued by paying out more than was being paid in. The taxpayer picks up the bill, if anyone does; most of the firms are history now.
That is exactly Kiwisaver, exactly Super; nothing has been put aside or earmarked; the future has been presented with multiple UOIs by an aging cohort. And the cupboard is bare....
Well in Kiwisaver you own the equites/bonds etc so you fund it.... unlike NZ super which is a disaster waiting to happen, no generation about to receive it will vote for means testing. We are hoping for a champagne retirement but making beer level contributions. It's bad now but will get worse. Can see many more retirees becoming home brewers or... hydroponic gardeners.
I don't see it that way. I see a bunch of lemmings who were 'paid' some digital representations of hoped-for future purchases. Those digital representations were put into a self-prophesizing ponzi (who said shares are worth more than some PE, and who said PE was underwriteable at current - let alone future - rates?)
If - when - the sharemarket readjusts, and presuming the system survives that event, what will those digits buy?
Funding is the wrong word, from here on.
The rest? Totally agree
Yeah the only people getting rich from retirement funds are fund managers, banks, CEOs - through performance bonuses, and politicians through selling the lie. Inflation is the issue. Inflation can only happen with money printing whether driven by bank leaning or government spending. Guess that’s why people by rentals though.
I think the only thing that has bottomed is the negative rate of house price growth at present.
Generally when markets do what ours has just done, or is doing, it takes about the same amount of time for the growth rate to turn positive, as it took for it to drop to the current low (i.e. its generally symmetrical and takes time for confidence to rebuild in the lending market and for prices to grow again).
So see how its taken about 12 months for the rate of growth to hit what appears to be a maximum negative level of price growth (around -14% p.a.):
Median house price growth | interest.co.nz
So it would be a reasonable bet to forecast that it will take another 12 months before prices have bottomed and start rising again (the bottom being when price growth returns to zero and is no longer a negative value). There is a certain amount of momentum with these types of events - like trying to turn around a supertanker...it doesn't happen on a dime.
You can see this trend in other housing markets that crashed - including the US during the GFC. A 'U' shape occurs in the rate of growth (in a negative sense) and when you get to the end of drawing the 'U' or 'V' then the market has bottomed - that would be when you know its a good time to think about buying. But not yet. We're still at the bottom of the 'U' or 'V' shape.
This is like the GFC but without the global co-ordinated central bank response, its more like a totally divided, hot/cold war response from global super powers already at war via sanction / economic trade restriction and hot war... Yep nothing like we have seen for some time. Or Aussie is just wasting its money on nuc subs and missiles.... Read the room. Some of us do not hope for anything, we just call it as we see it.
by HW2 | 1st May 23, 8:30pm 1682929810
You say you're independent but really you're not.
So the conclusion you draw is that because my views don't fit your biased narrative (when you have a username of Houseworks and that housing investment is the only good game in town), that it would be impossible for me to have independent views because I disagree with you?
Perhaps your world had become, or is, such an echo chamber of confirmation and recency bias that you wouldn't know what an independent line of thinking or argument was or is, no matter how well it is presented to you. It would be impossible for you to recognise it.
I guess Tony Alexander is your kind of 'independent economist' because he is funded by pro property interests! What a laugh! And yet sad that this is where we've ended up as a society.
Independent_Observer | 25th Mar 22, 12:06pm
A leech is usually defined as "a person who extorts profit from or sponges on others".
That would be more property investor/landlord types, not homeowner. Landlords are extorting profit from others and sponging off their weekly wages via rent.
Yes totally independent. Not even slightly biased
by HW2 | 1st May 23, 8:57pm 1682931442
Independent_Observer | 25th Mar 22, 12:06pm
A leech is usually defined as "a person who extorts profit from or sponges on others".
That would be more property investor/landlord types, not homeowner. Landlords are extorting profit from others and sponging off their weekly wages via rent.
Yes totally independent. Not even slightly biased
Lol - buying up rental properties during a housing affordability crisis is neither moral, nor perhaps a good financial choice!
I'm also against people who kill puppies, the burning of coal for power and many other moral wrongs - how does this mean that I'm not independent in my views?
All it really means is that you don't like my views because you are very afraid that I might be right - because your own vested interests means that it is very important that I turn out to be wrong.
Christchurch, ground zero for over building, progressive council, low costs and lots of houses.
Has run out of rentals. If your area hasn't yet, come back in a month and check again.
How many houses have gone to taxpayer-funded social housing in the last 3 years in New Zealand? 10K, 20K.
oneroof.co.nz/news/heartbreaking-tenants-in-tears-over-christchurchs-massive-rental-shortage-43479
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