Here are the key things you need to know before you leave work today.
TODAY'S MORTGAGE RATE CHANGES
No one has yet attempted to match BNZ - they have the low rate position on their own at present (and may do until the RBNZ's Thursday decision is out there formally). But you never know: the result is probably a "racing certainty". Update: ASB has matched BNZ's one year rate and cut most others to a market-leading level.
TODAY'S DEPOSIT RATE CHANGES
There are no rate changes today.
DAMP SQUIB
One of the later components of our Q2 result (which is due to be released on September 17) was reported today. The value of wholesale trade sales was $21.8 billion in the June 2015 quarter, down $71 million (-0.3%) from the June 2014 quarter, Statistics New Zealand said. It is not a stellar component, especially as inventory growth slipped too. Before the GDP result, we will get data on the manufacturing sector tomorrow and Current Account data on September 16.
RECOVERING?
Shares in Shanghai are trading higher after they opened today following their long holiday break. That has helped Sydney limit its losses. At the G-20, the Chinese officials there announced that their fiscal deficit will rise by 10% to NZ$400 bln next year to support their economy. That is getting up to levels the US is running (NZ$775 = US$488 bln), a country with an economy at least twice the size. At the same time China revised its 2014 growth down - maybe a signal that the future holds lower growth, or perhaps the future holds more accurate data.
FOOLISH BEHAVIOUR
Here's something to ponder. In the year to June (according to RBNZ C35 data), banks charged $11.5 bil in interest on mortgages, and the total we collectively owe banks rose from $190.1 bln to $201.4 bln. That's a rise of ... $11.3 bln. So, in other words we are not repaying enough to cover the interest in what we are borrowing. In the July to September period we paid about $2 bln of the interest, but as soon as 2015 came around we completely abandoned any semblence of that. It seems we are now collectively borrowing just to may some of the interest. This will not end well folks. Irresponsible madness has descended on us.
WHOLESALE RATES UNCHANGED
Swap rates were essentially unchanged today, up a tiny +1 bp across all terms. The 90 day bank bill rate went down by -1 bps to 2.88%.
NZ DOLLAR SLIPS
With Wall Street on holiday, markets are very quiet including the currency markets. The NZD is still at 62.8 USc, at 90.6 AUc and 56.3 euro cents. The TWI-5 is still at 68.7. Check our real-time charts here.
You can now see an animation of this chart. Click on it, or click here.
4 Comments
Swap rates were essentially unchanged today, up a tiny +1 bp across all terms. The 90 day bank bill rate went down by -1 bps to 2.88%
Didn't the RBNZ just confirm this week's anticipated 25bps OCR cut by it's own trading action today. View trade
Suggestion Box: interest.co.nz
It would be entertaining if you did an article from your archives -
What were the two top stories this day ten years ago - or even 5 years ago
What was running hot
Plus
What was Bernard's hot-button-topic the previous sunday
It would be an interesting companion piece on a day when there is no Top 10 at Ten
Or simply add a couple of links on your 90 seconds at 9 page with a teaser heading
Here's something to ponder. In the year to June (according to RBNZ C35 data), banks charged $11.5 bil in interest on mortgages, and the total we collectively owe banks rose from $190.1 bln to $201.4 bln. That's a rise of ... $11.3 bln. So, in other words we are not repaying enough to cover the interest in what we are borrowing. In the July to September period we paid about $2 bln of the interest, but as soon as 2015 came around we completely abandoned any semblence of that. It seems we are now collectively borrowing just to may some of the interest. This will not end well folks. Irresponsible madness has descended on us.
Surely the banks must create the extra money to pay the interest, or it cannot be paid, unless the government does it for them. We can't magic it out of two opposite entries in a ledger, like what they can.
Mortgage wars?
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