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
WBS has reduced its 2yr fixed rate by -19 bps The Cooperative Bank has also reduced fixed rates for terms 3 to 5 years, but it has raised rates for fixed terms 6 mth to 2 years.
TERM DEPOSIT/SAVINGS RATE CHANGES
None here today.
A $214 MLN HIT
Half-year profit drops for Westpac NZ as the bank warns of worsening economic outlook. The profit drop is -33% as the bank takes a $154 mln loan impairment charge.
INSURERS RESIST CONVENIENT COVER/PRICE COMPARISONS BY CONSUMERS
Insurers aren't keen on consumer comparison websites. Treasury emails hint at potential of Commerce Commission market study to see why insurers resist transparency, prefer opacity.
TOUGH STORM COSTS TO CAUSE SPIKE IN PREMIUMS
Tower says the Auckland Anniversary Weekend flood may now cost as much as $225 mln, while it says it won't be paying a half-year dividend to shareholders. "Tower is also increasing its guidance for gross written premium (GWP) growth from a range of 10% to 15%, up to a range of between 15% and 20%. This increase reflects strong rating response to address inflation, reinsurance increases and higher motor and other claims frequency."
SEVERE WEATHER WARNINGS
Metservice says: "A moist northerly flow brings heavy rain to many areas. Heavy rain is expected to affect northern and western parts of the South Island through to Tuesday. Heavy rain is also forecast to affect northern and western parts of the North Island from Tuesday. People are advised to keep up to date with the latest forecasts."
$100 MLN MINIMUM
The NZ operations of the Bank of China has launched a 3 year bond offer for $100 mln "minimum" as unconditional, unsubordinated and unsecured obligations, guaranteed by Bank of China, Auckland Branch. The indicative margin is "115-125bps" so if the 3 year swap rate is 3.60% on May 15, they will yield about 4.80% pa.
UP TO $150 MLN
Auckland International Airport confirmed today that it is offering up to $100 mln of five and a half year fixed rate bonds, with the ability to accept up to NZ$50,000,000 in oversubscriptions at their discretion.
TRACKING CYBER ATTACK INCIDENCE
As a regulator, the RBNZ is concerned about the rising risks of cyber attacks. The ability of cyber attackers to undermine, disrupt, and disable information and communication technology systems used by financial entities is a threat to financial stability. Service outages can affect individuals, businesses and organisations and lead to a loss of confidence where there is lack of alternative providers or disruptions between financial entities. So they are proposing to collect incident reports from industry members.
ON THE WAY BACK UP
The Japanese service sector is expanding at a good solid pace, and their best since this survey began in 2007. The growing expansion is underpinned by rising new orders.
ON THE WAY DOWN?
Australia's business confidence improved marginally in April from March but remains well below its long term average. Despite that improvement, the economists behind the survey expect things to weaken as 2023 progresses. They see 'conditions' as resilient but the business community without conviction that will continue, which is why they are downbeat looking ahead. The Australian 2023 Budget will be released tomorrow afternoon/evening NZT.
HOUSING CRUNCH TO GET WORSE FOR BUYERS/RENTERS
In Australia, the first quarter of 2023 saw the lowest number of building approvals since 2012, just as their population growth reaches a record high. Workers there are going to need all their extra pay increases just for rent and mortgages. Higher pay across the ditch (than here) isn't everything for everyone.
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SWAP RATES UP
Wholesale swap rates are probably up today, especially for 2 years and longer. 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 unchanged at 5.62% and 37 bps above the OCR. The Australian 10 year bond yield is now at 3.41% and up +1 bp from this morning. The China 10 year bond rate is also up +1 bp at 2.76%. And the NZ Government 10 year bond rate is now at 4.20% which is up +7 bps from this morning, but still above the earlier RBNZ fix at 4.14% which up +4 bps from Friday. See this local yield curve review. The UST 10 year yield is now at 3.43% and unchanged from this morning.
EQUITIES MIXED AGAIN
The NZX50 is little changed today from Friday's close. The ASX200 is up +0.7% in Monday afternoon trade. Tokyo has returned from holiday down -0.6%. Hong Kong is up +0.5% in their early Monday trade, which Shanghai is up an enthusiastic +1.5% at their Monday open. The S&P500 futures suggest that Wall Street will open +0.3% in theri Monday trade.
GOLD HOLDS
In early Asian trade, gold is little-changed at US$2020/oz and up +US$2 from where we opened this morning.
NZD HOLDS
The Kiwi dollar is holding at 63 USc. Against the Aussie we are softish at 93.2 AUc. And against the euro we are softish too at 57.1 euro cents. That means the TWI-5 is little-changed at 70.6.
BITCOIN SOFTER
The bitcoin price has fallen today, now at US$28,240 and down -2.4% from where we opened this morning. Volatility over the past 24 hours has been modest at +/- 1.8%.
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29 Comments
Speaking of comparison websites - given that an easy way for a lender to accommodate any stressed borrower is to extend the loan period, I just tried to load 50 years into your calculator, and it didn’t seem to like it.
Perhaps allowing an extended term in the calculator might assist some who want to know. The answer might be that the banks don't offer terms that long - but they will in due course.
All I can see it doing is allowing prices to increase even more. 50 years ago you could easily service a mortgage on one income as often only the husband worked. As more woman moved into full time work it generally now needs two working people per household to service the mortgage. Now loan terms overseas are being increased allowing even more to be borrowed. IMO Nationals plan to increase the age you can withdraw Kiwisaver, as well as the super age increasing to 67 for most people under 50 is another way to keep people working longer and allowing banks to increase mortgage terms.
Yeah, its a rapid trend towards more debt longer and greater risk (better hope neither of you get sick).
Over time, people will work longer, maybe ease back, but with no fixed plans to quit at a certain age. There will be new kind of casual/gig work in the age of AI - making a few bucks to train robots/chatbots etc. Not a bad job in semi-retirement. Old people used to pass on their wisdom to the young. Since kids are getting unaffordable they will have to pass it on to machines.
You have got to wonder why he would suggest this sort of thing rather than working out ways to actually making buying a house cheaper so such a large mortgage wouldn't be needed. Reducing interest rates does help bring prices down and also reduces the deposit required. but it doesn't seem property people in NZ like higher rates All they are doing is kicking the can down the road allowing houses to get more an more expensive as people can then afford to borrow even more. Crazy. I understand they don't have VAT on new builds in the UK, which the NZ government doesn't do, which could make quite a big difference in NZ .
Monetary Policy is the cause of unaffordability, and they won't give that up because it's how broke govts will struggle on a bit longer (sell bonds to central banks for conjured money). Lack of affordability is unfixable until the debt based financial system finally collapses. Until then we will spend our time arguing over how central planners should try to change the price of money.
Get the bank of mum and dad to help with the deposit and then you and your kids can pay the rest over 50 years. 3 generations needed to buy a little do up flat miles from the Tube in London. It doesn’t feel quite right does it! Imagine being in negative equity for 50 years.
Non performing loans. They will spike over coming 2 years, requiring banks to set aside increasing provisions and lowering profitability. It will also discourage lending (about 3 years after they should have become more risk averse). In the Irish situation we are heading towards it was almost impossible to get a mortgage for about 6 years, though in that case banks were effectively bankrupt and being run by the govt, who was also bankrupt and being run by IMF. We’re not there yet and banks are well capitalised but next 2 years will test them
Two Japanese companies with large energy holdings posted substantial profits last week. As Japanese, they played it down accordingly. Buffet is an investor in Mitsui.
Its high profits were bolstered by continued high energy prices globally. Mitsui owns oil and gas company MOECO, involved in production of liquified natural gas (LNG) and other fossil fuels in projects around the world, including in the US, Australia, and Russia.
Sojitz, another Japanese holding company with energy investments, also posted record profits of $814.7m (JPY111.2bn), up 34% from 2021/22, citing higher coal prices. However, both companies have forecast lower net profits for the current fiscal year, citing lower commodity prices.
https://www.offshore-technology.com/news/mitsui-posts-high-profits/
Developers giving discounts but they still seem very expensive to me: https://www.oneroof.co.nz/news/43538
“agents saying it’s an absolute buyer’s market that won’t be around for long. ”
Had one of my worst banking experieces with Westpac a couple of years ago. I went to internet banking to change my TD so when it matured it paid out to the -00 account instead of re-ivesting. You couldnt do it on their internet banking. I then phoned up, waited 20 minutes and then was told I had to go to a branch to change a TD maturity instruction. I then went to a branch and waited in a queue for 15 minutes. The teller said they could not do it and I had to see a customer service officer, But, there was none available for the 3 hours left in the day, I had to make an appointment. Went back 2 days later and the maturity instruction was changed. It was unbearable and ridiculous. On the internet banking of 2 other banks I use, you can change TD maturity instructions in about 30 seconds yourself. How can such ridiculous protocols exist in Westpac???? UNBELIEVABLE BUT TRUE
That's cos their entire backend is run on horrific systems, a LOT of spreadsheets and badly designed systems that don't talk to each other.
IB teams in banks are the silent heroes of the banking IT teams, they highlight these sort of issues and often highlight to and force the business transformation teams to consider them because of customer impact.
Westpac has the worst or second to worst NPS score of all the banks, consistently. I also think its part of why the Aussie parents are trying to sell the NZ side, it's a bit of a back end sh$t show that will be really hard to fix up.
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