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A review of things you need to know before you go home on Thursday; many TD rate changes, QV data out, terms-of-trade soften, Canadians (Kiwis?) chase phantoms, swaps rise sharply, NZD lower

A review of things you need to know before you go home on Thursday; many TD rate changes, QV data out, terms-of-trade soften, Canadians (Kiwis?) chase phantoms, swaps rise sharply, NZD lower

Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
There are no mortgage rate changes to report today.

DEPOSIT RATE CHANGES
But there have been many changes for savers to note today. Firstly ANZ tweaked its TD rates, with a 9 month one reaching 3.60%. However they took an ax to their savings rates, cutting most by -25 bps. TSB Bank launched a 13 month special at 3.65%, and at the sam etime, they cut some saving rates by -25 bps. UDC raised all their TD rates for terms 2 to five years by +20 bps. F&P Finance raised all their TD rates for terms of 9 months and more, and now almost all of these rates are above 4%. SBS Bank has reprised its 3.80% nine month rate which is a limited time special. Their 2 year TD is also now 3.80% and their 3 year is 4%. The Police Credit Union, and First Credit Union also changed savings rates.

LVR RESTRICTIONS BITE IN AUCKLAND
The QV November data was out today and that shows house price inflation eased to a six-month low of +12.4%. Auckland continues to feel the brunt of the loan-to-value restrictions, with the region’s house price growth slipping to a two-year low of +12.8%. Auckland’s house price inflation has been outpacing price growth in the other main urban areas throughout the last five years, but the gap is now at its smallest since January 2011.

MORE UNSOLD
The volume of unsold houses in the market is now trending higher. Nationally there are 16 week. In Auckland the level is 14 weeks and that is now a two year high. In Christchurch it is now 18 weeks, while in Wellington it was 8 weeks at the end of November. The recent earthquake will mess with their levels in the next few months however.

TRADE TERMS WORSEN SLIGHTLY
Our terms of trade - the relationship between export prices and import prices - fell -1.8% in the September quarter, due to goods export prices falling more than goods import prices. The terms of trade has fallen in four of the last five quarters. However, its still at an historically highish level.

LOWER INVESTMENT
Private new capital expenditure is falling quickly in Australia. It has fallen by more than -30% in two years and that is a decline of more than NZ$15 bln annual rate. Even for Australia, that is significant. Future plans don't look too flash either.

NOT BACKING OFF
More rises today in the WMP dairy futures market. The SMP product firmed as well. Although not signalling a huge rise, these markets are not backing away from earlier gains.

EASY TO BLAME, BUT NOT TRUE
It is convenient but both divisive and wrong to blame foreign buyers for Vancouver’s housing affordability crisis, the head of Canada’s housing authority said earlier today. He cited new CMHC data on the condominium market showing that 2.2% of condos in Metro Vancouver are currently owned by offshore buyers - roughly in line with the 2.3% total in 2014, and down sharply from the 3.5% in 2015. The survey also showed that offshore ownership of newer condos built since 2010 was higher - at five per cent. “The evidence tells us that the origin of investor activity in Canadian residential real estate is predominantly domestic,” he said.

WHOLESALE RATES RISE SHARPLY
As expected, wholesale swap rates rose faster and steepened further today. The two year is up +2 bps, the five year is up +5 bps, and the ten year is up +8 bps. The 90-day bank bill is unchanged at 2.04%. Yields on NZGBs are also higher, up +2 bps today.

NZ DOLLAR SOFTER
The Kiwi dollar is softer today to 70.8 USc. On the cross rates it is at 95.7 AUc, and is at 66.8 euro cents. The TWI-5 now at 76.8 Check our real-time charts here.

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8 Comments

Private new capital expenditure is falling quickly in Australia. It has fallen by more than -30% in two years and that is a decline of more than NZ$15 bln annual rate. Even for Australia, that is significant. Future plans don't look too flash either.

Australia’s economy may have almost ground to a halt last quarter, challenging views that the next interest-rate move will be a hike.

The US is not much better.

Atlanta Fed Slashes Q4 GDP Estimate From 3.6% To 2.4%

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I had a long term talk to my bank manager today, not a happy chappie at all. So red ink will spread through the economy.
I'm not worried about no growth and grinding to a halt, it's the reverse gear that keeps me awake at night. The unwinding of all that speculative debt that never had any real income supporting it.

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TRUMP=higher interest rates=highly leverage get severely squeezed.

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Many have been predicting interest rate increases but I've got my doubts - i think central banks will have drop OCR rates at least as much as credit spreads increase to maintain activity. In the short term only higher rates can impact residential property, as there is under supply in the big centres, and the RBNZ can relax deposit requirements so I think the market will harden, not have a major fall. Falling rates will put a bit of life back into other asset like bonds and defensive shares that have been soft due to expectation of increases too.

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Housing inventory increasing in ChCh as one would expect.

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CmHC is a crown organisation who is to say they are not trying to downplay foreign buyers just like this government does. You also forgot to mention the share of foreign buyers owning family homes is likely to be higher.

The real proof is in the pUdding with prices gains falling off a cliff.

"Canada Mortgage and Housing Corporation (CMHC), is a Crown corporation of the Government of Canada.[2]

CMHC is governed by a board of directors and is accountable to Parliament through the Minister of Families, Children and Social Development. Previously the portfolio was held by the Minister of Employment and Social Development. The board of directors and president are appointed by the Government of Canada.

http://m.huffpost.com/ca/entry/12988116
Vancouver’s Housing Market Has Seen 42% Of Its Money Vanish

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Imagine if we had stamp duty on the 357,318 hectares of land just sold this year.

357,318 hectares is equivalent to around 9milliom 400msq sections.

9million section equivalent sold with no tax. Incredible

"Foreigners' appetite for New Zealand land rose 442 per cent in the first 10 months of this year compared to the same time last year, official data shows.

Overseas Investment Office (OIO) revealed that from January to October last year, foreign entities got consent for deals involving 65,838 hectares gross of New Zealand land area. But in the same time this year, that rose to 357,318ha."

http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11758…

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Maybe the Phantoms exist. See the below. The article posted by CmHC was referring to total ownership, not annual sales etc. Huge difference. Also you forgot to mention family homes is higher that the 2%

When supply is tight (as we have heard a million times) then having an additional group of buyers drives the prices up .... not sure why people are so anti the idea of a stamp duty ...

See the below which explains the drop in % of buyers

'VANCOUVER - Foreign buyers continued to scale back Vancouver-area property purchases in October
Overseas investors made up 3 per cent of home sales in October in Metro Vancouver, according to data from the province's finance ministry. That was slightly higher than 1.8 per cent in September
but well down from the 13.2 per cent between June 10 and Aug. 1, the period before the tax took effect."

13% previously !!!!

http://www.bnn.ca/b-c-tax-drives-down-foreign-buying-in-vancouver-housi…

or this article showing that foreign buyers have moved from Vancouver to Victoria :

'The rising number of foreign buyers snapping up properties in the Victoria area is sparking debate about bringing Metro Vancouver's 15 per cent tax on foreign buyers to the capital region as well.
About 6.3 per cent of transactions in the Capital Regional District between June 10 and Oct. 31 involved foreign purchasers, according to the latest figures released by the province yesterday.
That's up from about 3.5 per cent since the last report in September."

http://www.cbc.ca/news/canada/british-columbia/victoria-foreign-purchas…

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