Here are the key things you need to know before you leave work today.
TODAY'S MORTGAGE RATE CHANGES
No rate changes to report today.
TODAY'S DEPOSIT RATE CHANGES
No changes here either. Update: F&P Finance has cut almost all its savings and term deposit rates by between -5 and -40 bps with a flattening bias.
UNDER ACHIEVING I
New residential dwelling consent levels were down in March on a national basis. It was worse in Auckland because they are still woefully short of what is needed in that city.
UNDER ACHIEVING II
There are now 14,975 registered real estate agents and offices in New Zealand, 6,894 (or 46%) of them are in Auckland. But only 35% of the houses that sold were in the City of Sails in the year to March 2016. On average an Auckland real estate agent sells less than 5 properties per year, dragging down the national average which is at 6.5 properties per year. That national average is going up while the Auckland one is going down. This data could either show Auckland agents are less productive than everywhere else, or it could just show that the well-publicised lack of listings is causing agent stress in Auckland. Makes you wonder why there has been virtually no effort on the part of agents to become buyers agents, rather than the traditional sellers agent. (This data is from the REAA.)
UNDER ACHIEVING III
The fall of in office leasing demand in Christchurch is having a big impact in the level of consenting new commercial buildings in the Garden City. And it is taking the wind out of the national non-residential building consent levels. The value of consents for office space dropped -23% from a year earlier. That's big, even if last year did include a rush of Christchurch earthquake replacement buildings. However, remember, there is still a humongous backlog of projects in Auckland, many of which still require consents.
GETTING ON WITH IT
The ANZ Business confidence survey lifted a touch in April, though the level remains low. The broader survey continues to point to solid economic momentum of around +3% growth. Pricing gauges remain low. Firms’ own activity expectations lifted from an index score of +29 to +32. The historical average is +27. That’s an economy with some backbone, notes ANZ. The construction sector is the star performer these days but even agriculture popped into positive territory. (But don't tell our commenters, who seem to be a perpetually negative lot. There are exceptions of course.)
YIELD CHASERS GET SERIOUS
There was $150 mln of NZGB 2033s on offer today and they received bids for $612 mln worth, a 3 times over subscription by 57 bidders. That demand saw only 13 of them win anything and they accepted just 3.165% as the yield. That is -20 bps lower than for the equivalent March tender.
HEAD SCRATCHER I
The latest mortgage book data out today from the RBNZ (S8) featues some curious stuff. The level of mortgages that can be influenced by an RBNZ rate hike (floating plus fixed-rate mortgages that will roll over with the next 12 months or less) now exceeds $130 bln. That is the highest level it has been since April 2014 and is now more than 60% of all mortgages. Even more curious is a +$771 mln jump from February in the level of floating rate mortgages to $51.4 bln. For 45 of the past 47 months the level of floating mortgages has been declining, almost halving over that period. Why it should jump in March baffles me. Any ideas?
HEAD SCRATCHER II
If our economy is growing roughly +/-3% per year and inflation is +/-1% per year, growth in nominal terms of all economic activity is roughly +/-4% per year. So why does our money supply grow at twice that rate (for M3) and has done for the past five years? And notes and coin values in circulation (M0) is growing even faster. I can't get my head around that as I am sure I am like most people and use cash much, much less these days. Is the illegal economy really growing that fast? M2, which is currency plus at-call bank accounts are growing the fastest at over +12%. That is consistent with the rapid growth of household bank accounts which broke through the $150 bln level for the first time ever to $151.1 bln as at the end of March. At the end of the chain of buying-and-selling houses, those who quit the housing musical chairs are pocketing huge amounts and parking them in bank accounts. Obviously the money supply can't grow endlessly faster than our economy. There will be a day of reckoning.
WHOLESALE RATES UNCHANGED
Rates at the long end rose by +1 bp but all other rates held steady. This was despite a sharp fall in benchmark rates on Wall Street earlier today. NZ swap rates are here. The 90-day bank bill rate rose by +1 bp to 2.40%.
NZ DOLLAR RISES
Following the OCR decision yesterday and a weaker than expected US Q1 GDP estimate, the Kiwi dollar has kept rising even if it is only a minor rise from this time yesterday. The NZD is now at 69.9 USc, at 91.4 AUc and 61.3 euro cents. The TWI-5 is at 72.5. Check our real-time charts here.
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26 Comments
Take the cash (banks' liability) away from it's duty offsetting banks' balance sheet assets (mortgage debtor's liabilities) and there is no longer a double entry book keeping system of record. Depositors need to be rewarded adequately - which is certainly not the case today, because the government is captured by vested interests, not lazy depositors. They are a necessity in a credit based currency system.
Start a bank run then. I am bored dealing with your idiotic understanding of the system we inherited once the US went off the gold standard - accept reality - credit as a substitute for money together with high grade securities is hardly represented by what's in your pocket - You are the slowest person I have come across and I taught many in my time on a bank dealing desk.
Maybe that the increase in money supply is going into the explosive growth in house prices, robbing non home owners of that tax free capital gain/income that they can never get, even if they try to save.
Leading to an unequal society we don't need, where doing absolutely nothing except gambling on house prices gets you rich, while being productive gets you nowhere(in a financial sense)
Leaving a lot feeling robbed, with justification.
That's an interesting one as the cash held in accounts is roughly an average of $65,000. Retirees were badly burnt by finance company collapses and are probably just holding onto their money. Others will be saving for a house. It's more money that what's needed for an emergency fund or cash buffer so there must be a reason.
If someone is high earning and saving for a 20% deposit then you end up with a higher balance. Beyond that it's hard to say. Maybe kiwis should be investing more instead of having idle money.
They are filling as fast as the banks create credit which equates to deposits once the new debtor exchanges the former for an asset - the debt funded sale proceeds represents the rising deposit base. Unfortunately, creating new deposits at a greater rate than production expansion depreciates the value of money as a matter of fact. The recent extraordinary rise in domestic asset prices embodies the proof, whilst production wage/incomes rises are minimal.
DC....Robbed in the same way you might intuitively see that a "counterfeiter" ...who prints money and spends it... benefits from this at the expense of other.s.. ( There is NO free lunch in money printing )
There are winners and losers when it comes to money supply growth.... ( In my view there is a strong relationship between Land values and money supply growth..... etc...etc.. )
The growth and prosperity of the FIRE sector of the economy has been the primary beneficiary of excessive Money supply growth ( credit grow)..
Figure out who, on balance, the losers are..???
Interesting comment David....so........where is this reflected in the CPI? Cause....it would be inflationary in reality. So these household banks accounts must be filling with 'funny money'.
Monetary inflation is robbing us every single minute of every single day, the numbers on those notes become meaningless and worthless by the day by a bank housing loan credit process, thus people need more and more and more for the same damn houses!
Are we seriously explaining this to you?
The jump to floating could be due to borrowers anticipating lower short term fixed rate, so temporarily 'resting' on a floating rate while scanning then choosing a lower fixed rate.
With 67 k migrants and 100k international students, and millions of tourists, Many of these will be bringing in the max of $10k cash, while some are getting away with slipping in with over 10k. Observe students buying cars with physical cash etc.
Yes, that is exactly what I have done , finished a fixed term in March , and have been on floating , waiting for a sub 4% fixed term. In hindsight, I should have fixed for 6 months, and saved around 1%. a online calculator would be good for these short term decisions. I.e , how long floating at say 5.5 %, waiting for a 4 % fixed term to come, vs fixing for 6 months at say 4.5 %,then fixing. It was previously my view that there was no point floating for 1-1.5 % more, when you could fix for a short 6 months, and I'm swinging back to that view.
Fixing for 6 months was the first thing I thought about for that so you have the right idea. Once the OCR drops the banks usually take a while to respond and for the terms to kick in for existing mortgages. So no harm in doing 6 months.
I gave up on the guessing and refixed for a year.
If you had floated in 2nd half of 2015, waited, then you could have fixed at 4.2 early 2017 instead of fixing at 4.7 in 2015 so saving .5 over 6 to 24 months. Yes, floating gives a wait and see option, but floating rates are very expensive at 5.5 so borrowers can't rest on floating for too long.
The bank pricing is very clever, influencing/tempting borrowers to lock in thus preventing the option of bank switching. And absorbing exorbitant 'break fees' (so called).
The gift of QE/ZIRP wealth transfer artifice from the pockets of the poor to those that control capital, funded by falling interest rates - pulling tomorrow's earnings forward via debt funded stock buybacks and unearned dividend payouts cannot proceed to infinity since corporate free cash flows are inadequate to fund the current debt service invoices.
The advance in U.S. stocks that began more than seven years ago is now the second-longest bull market on record. Here’s a look at the advance by the numbers, using the Standard & Poor’s 500 Index as a reference.
2,608 -- The rally’s duration, in days. It surpasses the one that ended in 1956.
207 percent -- The index’s return. Gains in the Obama bull market rank fifth in rallies dating back to 1929. The biggest happened during the Internet bubble of 1990-2000, when the S&P 500 surged 417 percent.
$15 trillion -- The total value added to U.S. shares since March 2009, roughly equal to the the European Union’s gross domestic product. Read more
David C
So why does our money supply grow at twice that rate (for M3) and has done for the past five years?
( compared to nominal GDP )
Because New money supply growth can go into "non productive " investment.... eg... Housing, equities ...etc.
ALSO... the idea of velocity of money may play a part ... ie.... How many times the new money goes round and round"..... u could say the level of .."spendiness" of people..??
For me.... the difference between the growth rate in M3 and the growth rate in nominal GDP is very meaningful...
Just like an addict that needs a , forever, stronger and stronger fix to get a slightly better Buzz....
The current financial system has inherent inconsistencies which render it mathematically impossible to sustain in the long term.
The only question is this; how far down the road can governments and bankers kick the can?.
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