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/LOAN RATE CHANGES
None today.
TERM DEPOSIT/SAVINGS RATE CHANGES
None here either.
DEMAND FOR UNSECURED PERSONAL LOANS ON THE RISE
The latest Equifax Quarterly Consumer Credit Demand Index shows unsecured credit demand rose +9.4% year-on-year, in the September quarter.
BACK TO THE FUTURE
Our analysis shows that the Auckland housing market is at a turning point where immigration-driven demand starts to outstrip supply, which could see a return of the housing shortages that plagued the region prior to 2020.
HOUSEHOLD LIVING COSTS STILL SKY-HIGH
The cost of living for the average New Zealand household is again going up at an increasing rate, according to new data released by Stats NZ. Interest rate payment hikes and rising food costs are key drivers.
'SOME FARMERS WILL DEFAULT'
Some farmers will struggle to cover costs this season and could pose a risk to financial stability if loan defaults rise because the dairy price stays lower than b/e, the RBNZ warns in one of its drip-feed FSR releases ahead of the Financial Stability Review on Wednesday, November 1, 2023.
STILL VERY HIGH DEMAND FOR NZGBs
In today's NZ Government bond tender, there were 138 bids totalling $1.38 bln for the $500 mln available in three maturities. The $200 April 2027 maturity went for a yield of 5.32% which was up from 5.06% four weeks ago. The April 2033 $200 mln went for a yield of 5.49% which, interestingly, was down from 5.54% two weeks ago. Unusual. The May 2051 $100 mln went for 5.64%, up from 5.14% four weeks ago. All up only 35 bids were accepted.
HOME LOAN PAYMENT PRIORITY CONFIRMED
New data out from the RBNZ shows that $4.6 bln in interest was paid in the September quarter on home loans. This is the highest quarterly amount on record, and is more than +44% higher than the same quarter a year ago. It is almost double the September quarter in 2021. The same data shows negligible mortgage writeoffs, rising but still small past due amounts (0.08% - yes 0.0008), and most borrowers keeping up the excess payments (regular mortgage payments over and above what the mortgage contract requires). These are still over $4 bln per quarter and haven't flagged since 2015.
MORTGAGE MARKET STABLE
First home buyers are still signing up to about a quarter of all new home loans, existing homeowners a bit less than 60%, and investors a bit less than 20%. These relative levels haven't changed since late 2022. Overall new home loans came in at $5.2 bln in the September 2023 month, little-different to the $5.1 bln in September 2022. More here. They just cost more.
SWAPS HOLD
Wholesale swap rates have probably held little-changed today at the shorter end, but the long end took off higher. The real reaction will come at the close. Our chart will record the final positions. The 90 day bank bill rate is +1 bp higher at 5.65% and now +15 bps above the OCR. The Australian 10 year bond yield is up +13 bps from yesterday to 4.86%. The China 10 year bond rate is unchanged at 2.74%. The NZ Government 10 year bond rate is up +7 bps at 5.57% from yesterday, but still above the earlier RBNZ fixing of 5.50% which was up +6 bps from yesterday. The UST 10 year yield is up a very sharp +16 bps from this time yesterday at 4.97%. The UST 2yr is up +6 bps to 5.12%, so the curve inversion is now down to just -15 bps its least since mid July 2022.
EQUITIES GLUM
The NZX50 is down -0.7% in late trade today compounding the recent dips. So far it is down -1.8% this week. The ASX200 is down -0.9% in afternoon trade. And Tokyo has opened down -1.8% in its early Thursday trades. Singapore is down -0.2% at its open. Hong Kong has also opened down -0.2% and Shanghai has opened down -0.4%. Wall Street closed down -1.4% on the S&P500 in its Wednesday trade.
GOLD RISES
In early Asian trade, gold is now at US$1985/oz and up +US$12 from this time yesterday. Earlier in New York it closed at US$1980/oz, and earlier still in London it closed at US$1970/oz. Also, see this.
NZD SLIPS
The Kiwi dollar has fallen from this time yesterday and is now at 57.9 USc. But against the Aussie we back up the ½c we dropped yesterday to 92.1 AUc. Against the euro we are up +¼c at 55.8 euro cents. That means the TWI-5 is down -40 bps at 68.1.
BITCOIN FIRMER
The bitcoin price is higher again today, now up at US$34,745 and up +1.7% from where we were this time yesterday. Volatility over the past 24 hours has been moderate at just over +/- 2.1%.
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47 Comments
$4.6 bln in interest was paid in the September quarter on home loans. This is the highest quarterly amount on record, and is more than +44% higher than the same quarter a year ago
Certainly not good for borrowers, some won't be able to sustain this increase in expense indefinitely.
It would be interesting to know by how much interest received by investors (typically bank term deposits) increased over the same period, in order to get a complete picture
Quarterly interest - comparing quarter ending Sep 22 to quarter ending Sep 23...
- Interest paid on mortgages: $3.3bn to $4.6bn
- Interest paid in business loans: $2.4bn to $3.7bn
- Interest received on term deposits / savings: $1.2bn to $3.1bn (there are a few ways of working this out and they don't always tally - this is from RBNZ S40 and RBNZ B7)
https://ticdata.treasury.gov/Publish/mfh.txt
Fact checked.
Thanks. Not on GP Forums sorry.
Selling the USTs allows them to take yen out of circulation. No one wants Japan’s paper money so Japan has to sell USTs to get USD to sell that USD for their worthless currency and stabilize the FX rate. In turn it puts upwards pressure on US yields, which in turn pushes up rates all over the show.
The BIG Japanese pension funds haven't been getting good yields in Japan for over a decade. So they convert their Yen savings to USD and buy US govt bonds. They get good interest but they take some currency risk with it.
Now in order to save the Yen, BOJ might raise interest rates. This will do two things. It will appreciate the Yen and make local govt bonds more attractive. Although yields will still be low, the pension funds wont have to take that currency risk. This will motivate those Investors to sell those US bonds. They receive USD, convert it to Yen and buy Japanese bonds.
Net effect is more USD and less Yen in the market, This strengthens the Yen, weakens the USD.
Hope that answers your question.
Big money laundering bust in Aussie - “one of the largest independently owned remitters in the country.” Turning over $10 billion in three years, allegedly with the help of insiders at major banks - the same banks creating credit for the property ponzi. The interesting thing is that this is only scratching the surface. The problem will most definitely be larger.
https://www.thenewdaily.com.au/news/2023/10/26/changjiang-currency-exch…
I wonder how many bank staff are ‘turning a blind eye’ to stress testing mortgage applications.
The top brass' bonuses depend on the punters signing on the dotted line. The bank foot soldiers are encouraged to do what it takes. Their livelihoods depend on it. While the top brass keeps away from the muck and an arm's length from any legal repercussions.
I suspect that application of stress testing is rubbery and has some element of subjectivity.
I got an email today to say that TSB bank are lowing their interest rate to 3% on Premier bank accounts, from the current 4.20%, for amounts between 0 - $19,999, from the 1st November. A bit odd that a bank is actually lowering rates in the current environment rather than increasing them.
It is true, and takes effect from teh beginning of November, so only giving people a few days notice. Suspect interest will update it next week.I moved all my money in the account except $6k to another bank with a higher rate. You need a min of 5k for the account not to incur a $10 per month account fee. It is still a good account and a good bank to deal with esp being locally owned. Just annoying they would do this, and means others will do what I did. So it coudl end up negatively impacting them in the long run if a lot of people move money out.
Very significant.
The first "why is Bitcoin going up??" article have appeared in the media:
https://www.newshub.co.nz/home/money/2023/10/why-bitcoin-has-at-least-d…
You will see their last article was one year ago - "bitcoin is turning into a trainwreck" - the price was $16k.
Significant as these are the types of things that start to prompt retail movements into BTC
The related news link on the page 'Why cryptocurrency is risky but presents a massive opportunity for New Zealand to lead the world' is an indicator of how braindead our financial media is in terms of this issue.
-- The clickbait 'lead the world' or some kind of ranking is the only way our media knows how to engage. NZ is far behind leading countries such as S'pore and the UAE on crypto and blockchain related application.
-- No disrespect to Janine Grainger, but Easy Crypto is not some kind of 'player' in terms of crypto exchanges. Nice interface but they're essentially feeding off OTC desks and market makers.
Anyway, your point about the market psychology is spot on.
TA getting very excited after the election: https://www.oneroof.co.nz/news/tony-alexander-property-investors-are-fe…
Sorta maybe? Saving over $30k on rent whilst my wife also gets a minimum $30k pay rise just seems to make sense.
We were always planning on emigrating - not to Aus - but who knows, if we like it we may just stay there.
@HM, WA.
[Even being willing to downsize rental here to save a bit of extra $$ here wasn't happening - haven't had a single response in 9 months! Landlord hasn't given us a rent increase - but also didn't want to refix - so we're wary of our possible future here].
Leading Aussie ETF manager Betashares today announced the launch of a revolutionary new investing platform designed to help investors build long-term wealth. Called Betashares Direct, it will initially allow self-directed retail investors to invest in any ETF traded on the ASX - whether from Betashares or other ETF managers - with zero brokerage.
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