Here are the key things you need to know before you leave work today.
TODAY'S MORTGAGE RATE CHANGES
Sovereign announced its parallel rate rises to those announced yesterday by ASB.
TODAY'S DEPOSIT RATE CHANGES
Kiwibank cut its six month term deposit rate today from 3.60% to 3.15%. Westpac reduced its online saver rate to 0.35% from 0.50%.
STILL SHRINKING
Aussie manufacturing and the much larger services sector both contracted in September, but at a slower rate than in August. Their construction industry also contracted in August, but has eked out a small expansion in September.
THE POINT OF CUTTING BAFFLES BILL
Finance Minister Bill English is in the American capital for meetings with reps for the IMF and World Bank. He will also see the credit rating agencies. He is reported to have said everyone seems to think interest rates have reached the bottom, and will soon begin to climb again. "The Reserve Banks around the world believe more cuts in interest rates may not have the stimulating effect on the economy that they used to have," he said. When he gets back, I wonder if he will pass that view on to the RBNZ. Markets here still think the RBNZ will cut rates one more time this year. It sounds like English is unsure why. He certainly isn't about to do any fiscal stimulus either.
LOCAL KNOWLEDGE
Following on from ANZ's Truckometer judgment that NZ economic growth is developing solidly, Westpac economists have come to a similar conclusion from their own analysis. Activity indicators were subdued in August they said, with softer trends in housing, agriculture and tourism indicators. "Nonetheless, growth looks set to continue at a solid pace for the rest of this year."
$151 MLN @ 4% PLUS
Z Energy today announced that, following the successful book-build for its offer of five year and seven year fixed rate bonds, $151 million of bonds have been allocated across both series of bonds to participants in the General Offer. $110 million of 2021 Bonds, which have a maturity date of 1 November 2021. The interest rate for the 2021 Bonds has been set at 4.01% pa. $41 million of 2023 Bonds, which have a maturity date of 1 November 2023. The interest rate for the 2023 Bonds has been set at 4.32% pa.
A BOOMING SECTOR
International air travel was up +4.6% in August, a slowing of the +6.4% year-on-year gains in July. However, gains in the Asia-Pacific region are still strong, growing +7.8% in August. Given NZ visitor arrivals are up +9% in the same period, we are clearly getting our share and more.
WHOLESALE RATES INCH UP
The wholesale rate rises are still coming although the pace of the increases has slowed today. Most terms were just +1 bp higher, although the ten year is up +2 bps. The 90-day bank bill is down another -1 bp to 2.18%.
NZ DOLLAR HOLDS
The Kiwi dollar has level-pegged with the USD today, allowing some small gains on the cross rates. The NZD/USD is now at 71.4 USc. On the cross rates, it is trading at 94.2 AUc, and is at 64.2 euro cents. The TWI-5 is 75.3. We are also now at an all-time high of 57.4 pence against the GBP as the UK currency takes another 'pounding'. Check our real-time charts here.
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13 Comments
Re: Bill English and interest rates.
He also had some sage advice for borrowers! "English said New Zealanders burdened by debt should pay it off now, before the rise in interest rates makes it impossible."
OK, so you've heard it first from Bill. A couple of hours overtime should see off that 500k mortgage I guess!
I think he's is banking on the RBNZ OBR scheme sacrificing depositors' ownership of bank liabilities.
Anything else is impossible, given household financial liabilities (including rental properties) as a percentage of household disposable income currently stands at 165%.
Sounds like a snap election before this debt boom explodes. We are in for some hard times if interest rates rise its that simple. Further OCR cuts will not be passed on by the banks. We needed policy for the last decade to keep houses at an affordable level. We didnt get it so we had a boom both in house prices and corresponding debt. It suited the banks and the government as it has kept us out of a recession. Were going to have to pay down debt to get 'real growth' and stop feeding banks profits with more money borrowed on dam houses.
Singaporeans have quietly sorted out the property market having been the first to react.
In Vancouver they acted late and in a panic.
Big crash in place in Vancouver whilst in Singapore prices have flatlined to slightly down over past 2 years. Singapore is the best example of taking the steam out of housing market.
http://www.bloomberg.com/news/articles/2016-10-06/singapore-crushing-ho…
what a brilliant idea
46% of buyers of are investors in NZ... no wonder prices are going through the roof
http://www.cbc.ca/news/canada/british-columbia/west-vancouver-investmen…
The District of West Vancouver wants to levy a higher property tax on investment properties, but it won't involve tracking vacancies or foreign citizenship.
Councillor Craig Cameron said the idea is much simpler.
"We are proposing a house tax that applies to all houses that somebody owns that are not designated their principal residence."
Cameron says much like Vancouver's vacant home tax, people would have to declare if a home is a principal residence when they pay their property taxes.
But unlike Vancouver's proposal to exempt rented homes and target only those left vacant, West Vancouver's tax would apply to all homes that are not the owner's own principal residence.
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