Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
NZCU Baywide have raised fixed rates for all terms of 6 months to two years by between +25 bps and +40 bps.
DEPOSIT RATE CHANGES
NZCU Baywide increased all rates from 6 mths to 2 years, by between +5 bps to +45 bps.
SUPPLY SIGNALS TURN LOWER
The number of building consents slumped in April and the Easter Bunny gets the blame. There was a sharp decline across the country, and at these levels Auckland's housing supply crisis is clearly worsening. Nationally, consents are down +10.8% compared with the same month a year ago. But at least they are not down like they are in Australia, where they fell -25.2% on the same basis.
NON-HOUSING BUILDING CONSENTS FALL TOO
Infometrics reports: "Non-residential building in April pulled back from its massive March result, with the seasonally adjusted value of consents plunging -40% from the previous month. Compared with last year, consents approved in April were down -11% to $411 mln, although some of this drop will have been due to changes in the timing of Easter. April’s result was below the average monthly level of consents over the last year, but the total value of consents over the last three months is still +28% higher than a year earlier."
LOOKING UP
Synlait Milk today said it expects its 2017/18 season milk payout level to be $6.50/kgMS. It has a current forecast for this season of $6.25kg/MS, a level it will finalise in September.
IT'S BIG, BUT ONLY A START
The air might be going out of house prices, but the value of KiwiSaver investments is where the action is now. These were up +20.8% in the year to March 2017, according to RBNZ data released today. The amounts invested overseas is up to 46.8%, no doubt aided by the fall-back in the NZ currency. Over 64% of this nest-egg is invested in equities, indicating KiwiSavers generally are happy to take on some investment risk to participate in higher longer term returns. About 26% is invested in fixed-income debt securities, and less than 9% is held in cash. The total value now invested in KiwiSaver is almost $41 bln. However, that represents only three years of National Super payouts provided in the 2017/18 budget which shows an annual cost of $13.7 bln and rising +4.8% in the past year.
HOUSEHOLDS SEE LIABILITIES GROW FASTER THAN ASSETS
There was an update of the Kiwi household balance sheet today. That shows that household financial assets are now up to $806.4 bln as at March 2017, a rise of +2.7% in the year. (Financial assets do not include housing values.) Financial liabilities however do include mortgages, and these are now up to $197.9 bln, a +7.7% annual rise. The net financial equity of all our households is $608.5 bln, a mere +1.1% rise in a year. (The RBNZ reports the 'value' of housing separately. And investment in residential property rentals are not part of this analysis as they are considered business investments.)
ANOTHER CORPORATE DEBT ISSUE
Summerset Group Holdings has announced an offer of up to $75 mln, with the ability to accept up to $25 mln in oversubscriptions, of six year, fixed rate bonds maturing on 11 July 2023 to New Zealand institutional and retail investors. The bonds will be unsubordinated obligations of Summerset, and will have the benefit of a guarantee and security package provided by the Summerset group.
WHOLESALE RATES LOWER
Local swaps rates have fallen today giving up all of yesterday's rises. The two year is down -1 bp, the five year is down -2 bps, and the ten year is down -3 bps. The 90 day bank bill rate is unchanged at 1.97%.
NZ DOLLAR FIRM
The NZD stays firm at 70.5 USc. On the crosses we are at 94.9 AUc, and at 63.3 euro cents. The TWI-5 is still at 75.
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19 Comments
This news from equities!
"Mortgage fraud is endemic, it's systemic, it's just terrible what's going on. When you've got 30-year-olds, who have never seen a property downturn before, borrowing up to 80 per cent to buy three and four apartments, it's a bubble."
http://www.smh.com.au/business/markets/fund-manager-hands-back-cash-to-…
David,
"...household financial assets are now up to $806.4 bln as at March 2017, a rise of +2.7% in the year. (Financial assets do not include housing values.) Financial liabilities, however do include mortgages..."
1) What assets are the $806bln made of then ?
2) From an accounting perspective, it seems wrong to include mortgages but not the houses (assets) these mortgages relate to
Todays news: Just read this:
" Hemal Patel won his employment case last year against his former employer, Papatoetoe car yard S & G Plus Auto Electrical (S&G) in south Auckland. Patel went 73 weeks without being paid, saying he was too afraid to make a complaint for fear of losing hs job and eligibility to live in New Zealand. The Employment Relations Authority (ERA) in June 2016 awarded Patel more than $50,000 however he may not receive a dollar after the company went into liquidation in November." at http://beta.nzherald.co.nz/front-page-top-stories/news/article.cfm?c_id…
My opinion he should be compensated by the Minister of Immigration personally. Somebody has to fix this system! It only needs a simple follow up for all potential applicants for residency.
Everything that is happening is a scam starting from student visa - no one is hear to study but use student visa as a pathway for residency.
Than they work for peanuts as need job offer and business needs free or cheap labour to show prifit and prosperity (national defintation) and also many pay to get job offer.
Hard to believe that government is not aware of it but turns a blind eye as it is their idea of prosperity. More the merrier.
Vote for change.
I've seen a few reports that the industries needing skilled people are still having trouble finding any, because the polytech courses are cluttered up with people who don't give a rats about learning the skills or earning the qualification, and are only there for the residency scam.
as per the example above, 73 weeks of no pay, why stay after a few weeks unless there was going to be help to become a resident. me thinks once he realized that was not going to happen the money suddenly became the important issue
the other thing that stands out is the countries that the perpetrators and victims come from
http://beta.nzherald.co.nz/northern-advocate/news/article.cfm?c_id=1503…
http://www.newshub.co.nz/home/new-zealand/2017/05/auckland-restaurant-w…
http://beta.nzherald.co.nz/northern-advocate/news/article.cfm?c_id=1503…
Virtually every class of US debt — sovereign, corporate, unsecured household/personal, auto loans and student debt — is at record highs. Americans now owe $1tn in credit card debt, and a roughly equivalent amount of student loans and auto-loans which, like the subprime mortgage quality that set off the 2008 financial crisis, are of largely low credit quality (and therefore high risk).
US companies have added $7.8tn of debt since 2010 and their ability to cover interest payments is at its weakest since 2008, according to an April International Monetary Fund report. With total public and private debt obligations estimated at 350 per cent of gross domestic product, the US Congressional Budget Office has recently described the path of US debt (and deficits) as almost doubling over the next 30 years.
But this is not just a US phenomenon. Globally, the picture is similarly precarious, with debt stubbornly high in Europe, rising in Asia and surging across broader emerging markets. A decade on from the beginning of the financial crisis, the world has the makings of a fresh debt crisis. Read more
Is that a wish, or analysis? In dollar terms, household financial assets rose +NZ$21 bln in the year to March while financial liabilities rose +$10 bln. Hard to see how you could conclude "Household finances slump" ...
By any measure, they are in good shape overall (although there may well be a distribution issue).
I'd hope that the assets are separated. Certainly that's the case with my provider (https://simplicity.kiwi/faq/ 'How safe is my money with Simplicity') such that if the company fails my assets remain. I'd hope everyone else has checked with their own provider and moved their funds away if the answer isn't satisfactory.
Well, according to the article 64% is in equities so if 'the stock market' (not sure which market exactly you're referring to as the investments will be distributed around the world) halves, the balance would presumably reduce by ~32%.
This would be fantastic news for the vast majority of kiwisavers as it means our contributions can afford to buy more assets for the same value. There could be some pain for those wanting to spend their funds in the next few years but they have likely balanced away from equities to avoid exactly this risk.
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