Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
ASB raised its floating rate by +15 bps to 4.60% and its Back My Build rates is up +25% to 2.29%.
TERM DEPOSIT RATE CHANGES
ASB raised some savings account rates by +25 bps to 0.65%.
A SERIES OF +25 BPS RISES COMING
The RBNZ raised its OCR today by +25 bps to 0.75%, and bringing some reality to those pundits who thought a +50 bps was likely (mainly observers from offshore). But +25 bps was universally picked by the local bank economists. They also signaled they will steadily raise the 0.75% OCR to 1.50% through to the middle of 2022 and 2.60% in 2023, and holding from there.
AFFORDABILITY WORSE
Auckland's lower quartile house prices were up +$85,000 in October putting home ownership beyond the reach of people on average wages. See our full home loan affordability report covering the whole nation here. In only eleven of the 28 urban areas we cover can home loans taken out in October be described as 'affordable' for firm home buying borrowers.
OPENING UP
The Government has detailed how restrictions around international travel will be loosened from mid-January. From January 17, vaccinated New Zealand citizens, residence-class visa holders and other travelers eligible under government settings who arrive in New Zealand from Australia won't need to go into managed isolation/quarantine (MIQ). Rather, they will be able to self-isolate for seven days. From February 14, the same rules will apply to New Zealand citizens, residence-class visa holders and other travelers eligible under government settings who arrive from other parts of the world. From April 30, foreign nationals will be able to self-isolate on arrival in New Zealand. This reopening might be staged by visa category.
ONLINE FRENZY
NZ Post says Kiwis spent an average of $25 mln per day online shopping in October. This activity was up +71% on last year and becoming the go-to for purchases of all sizes. They also report the 'shop local' motivation still strong.
TOWER PLANS $30.4 MLN SHARE BUYBACK
Insurer Tower has posted a +72% increase in annual profit and unveiled a $30 million share buyback. September year profit rose $8.1 million to $19.3 million with Tower paying a 2.5c per share final dividend. The insurer's solvency ratio was 271% at September 30, with the company holding $56.6 million above its target solvency margin. Given current opportunities and the capital position, Tower's Board is proposing paying out $30.4 million of capital to shareholders via a compulsory share buyback under a Court Scheme of Arrangement. Tower says underlying net profit after tax including large events was $20.8 million versus $28.4 million in 2020. Gross written premium rose 5% to $404 million, and customer numbers increased 5% to 304,000, with market share at 9.2%.
SQUIRREL LAUNCHES PIE FUND FOR RETAIL INVESTORS TO INVEST IN HOME LOANS
Mortgage broker Squirrel is launching the Squirrel Monthly Income Fund in partnership with InvestNow, offering retail investors access to a diversified portfolio of loans for homeowners. Squirrel says the expected returns before tax start from 4.50% p.a., being the OCR + a 4% margin, and will be paid monthly. The Fund will have a portfolio investment entity (PIE) structure.
FIRST HOME BUYERS NOT SCARED OFF IN OCTOBER
First home buyers piled into new mortgages in the past month as total mortgage advances get close to $8 bln again. The housing market remains amazingly buoyant even as interest rates are getting cranked up.
LOCAL PANDEMIC UPDATE
In Australia Delta cases in Victoria have risen sharply to 1196 cases reported there today. There are now 9,774 active cases in the state - and there were another 3 deaths yesterday. In NSW there were another 248 new community cases reported today, and a rise, with 2,647 active locally acquired cases, and they had another two deaths yesterday. Queensland is reporting zero new cases again. The ACT has 15 new cases. Overall in Australia, just under 85% of eligible Aussies are fully vaccinated, plus a bit over 6% have now had one shot so far. In contrast, there was one case in New Zealand at the border, and 215 new community cases today (again). Now 91.5% of Kiwis nationally aged 12+ have had at least one vaccination, and the Australian rate is now at 91.7% of all aged 16+.
GOLD DROPS AGAIN
In early Asian trading, gold is at US$1792 and down another -US$18 from this time yesterday. It closed in New York at US$1790 earlier.
EQUITIES MIXED AGAIN
On Wall Street, the S&P500 closed up +0.2%. Tokyo is down -0.7% in early trade. Hong Kong has opened -0.2% lower and Shanghai has also opened -0.2% lower. The ASX200 is unchanged in early afternoon trade. The NZX50 Capital Index is up +0.2% in late trade.
SWAP & BONDS RATES DROP
We don't have today's closing swap rates yet. They are probably sharply lower as markets got ahead of the RBNZ with rates down about -15 bps. The 90 day bank bill rate is unchanged at 0.87% (set before the MPS).The Australian Govt ten year benchmark rate is now at 1.91% and up +2 bps from this time yesterday. The China Govt 10yr is at 2.93% and marginally softer. The New Zealand Govt 10 year rate is now at 2.50% and down -8 bps, and well below the earlier RBNZ fix (before the OCR announcement) for that 10yr rate at 2.61% (-1 bps). The US Govt ten year is now at 1.66% and another +3 bps firmer from where we were this time yesterday in a continuing rise.
NZ DOLLAR SOFTER
The +25 bps OCR rise and forward commentary 'disappointed' markets. The Kiwi dollar is now down at 69.2 USc and nearly -½c lower than where we were this time yesterday. Against the Aussie we are down at 95.9 AUc. Against the euro we are down at 61.6 euro cents. The TWI-5 is now up at just on 74 and soft.
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BITCOIN HOLDS
The bitcoin price is now at US$57,349 and up a modest +1.2% from this time yesterday. Volatility in the past 24 hours has been moderate at just over +/-2.2%.
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54 Comments
A few people in the comments lately have been asking about the vaccination status of those who have died in the current Delta outbreak. Luckily this is now public - 10 of the 15 were unvaccinated and another 2 within 2 weeks of the first jab (barely vaccinated). This is despite the vast majority of at risk people having been vaccinated.
More strong evidence for the life saving impacts of the vaccine.
https://www.stuff.co.nz/national/health/coronavirus/300462049/covid19-d…
1 shot really doesn’t count IMO, so only 3 were vaccinated. No one says the vaccine is perfect, particularly if you are really old or have really bad conditions it won’t always save you. Those numbers look really good to me, far better than what we are seeing from other countries on a cocktail of less effective vaccines.
Agree, they should also be disclosing co-morbidities for all hospitalisations and deaths by age cohort for vaxxed vs unvaxxed. My bet is the vast majority of hospitalisations will be old, frail and/or those with existing co-morbidities, as per UK data. Even then, we still have this perplexing situation of recording deaths "with covid" rather than necessarily "from covid" to contend with.
Hopefully more data will be released in time. I guess when you have a small group it quickly becomes very easy to identify specific patients if you know someone who has died - your auntie might be the only person in the 60-70 female group, for example, allowing you to quickly link some data together.
Without meaning to sound morbid, once we have a few hundred deaths it'll be a lot easier to anonymise and release more complete data without breaching confidentiality.
What about the guy that died from.. I want to say; gunshot wounds and was counted as a 'NZ Covid Death'? How many more cases like this are throwing off data sets? With low mortality rates, proper/true inputs are extremely important in producing useful statistics.
What's happening with treatment plans for people? Healthy Eating? Immune Boosters: vitC, zink, fruit smoothies, ginger, onion, garlic, bowl-of-vegetables, sunlight lol? What about Ivermectin at $0.20c per pill, or Pfizermectin at $300 per pill?.. do we like the mectins or are they still taboo?
The private importation of Ivermectin was made illegal [correct me if I'm wrong] and the prescribing of Ivermectin for Covid is not allowed. Well, I hope NZ is SURE it doesn't work.. India seems to have it as a main treatment.. and by all accounts they'll keep using it. For $0.20cents a pill I'd suggest Doctors petition to at least be allowed to give it a go?
Yes, in the context of ~95% of those 65 or older being vaccinated, and >80% of 35-65 year olds.
Some simple maths suggests that if the vaccine did nothing, something higher than 90% of all deaths would be vaccinated. That would mean something like 90 vaccinated deaths rather than 5 (or 3 and two bits).
And as you so well show, maths can tell us anything we'd like to see.
If 'just' 160,000 people died of Swine Flu a decade back, would that number have been more or less if we'd developed a vaccine for it back then? Answer: We don't know.
Neither do we know if +6 million would have died this time, if we did or didn't use the current vaccine.
We can only look at the maths and form an opinion.
Interesting question. There's a nice graph linked here called rate ratios and uptake over time:
https://www.health.govt.nz/our-work/diseases-and-conditions/covid-19-no…
Looks like the 65+ fully vaccinated uptake was around 50% at that point, and 50-64 around 20-30%. Of course there were very few cases back then, and only 2 of the 15 deaths occurred before the start of November. At this point the fully vaccinated rates were ~90% and ~80% respectively. I expect we can agree the vast majority of deaths will occur in >50 year olds.
So you're right, this would change my numbers a little. Perhaps those expected 90 vaccinated deaths would reduce to more like 70-80 if I did a more thorough job. Still, a reduction from 70 expected to 5 actual is pretty impressive.
One global vaccination graph puts New Zealand's full vaccination rate at time of delta outbreak , early August, at 16.4 percent of the population rising to 50 percent on 11 October , that is , putting other factors aside, an unvaccinated person was more likely to get covid within that time frame.
Secondly a large group who were double vaccinated earliest were those in rest homes/retirement homes, generally a group that has both age and comorbidities. This group has for the past three months been basically in lockdown, with very few visitors or contact, in essence the vaccine has not been tested , although that time is rapidly approaching.
Thirdly, the date of death is of little relevance to when the infection has occurred during the recent outbreak
In terms of data collection, over the past two days , Singapore ( which has generally offered more information ) has had two 105 year old's die from /with covid. I am unsure of their vaccination status.
I am still working & will be 80yrs old in a few months. I have some negative health factors. I am double vaxxed, & feel no concern at all. The overwhelming evidence supports vaccination - its not perfect, but it gives us the best chance of surviving Covid when we get - because most of us will get it. Meantime, people are dying of various ailments which are not being adequately treated.
Surely when our current Delta outbreak occurred most under 65 were not vaccinated. They need to match date of falling ill against vaccination rate. If they did that it would look less impressive.
However another pair of 'voicesforfreedom' leaflets arrived today. What a load of nonsense - not so much wrong as so what. Meanwhile why do some countries delay booster for 6 months and other 5 months? And does anyone have any data suggesting the booster should be different from the first two vaccinations?
True, but a lot of the deaths have actually occurred more recently due to case numbers ramping up. And even if you had the vax percentage at the time, you also have to somehow weight by age brackets. We would have had a crap load more deaths had our over 65s not been mostly vaxed when we got Delta.
There is also this useful data:
Based on the cases in the last fortnight, unvaccinated people are 8 times more likely to get Covid-19 than people who have received two doses, and 16 times more likely to be hospitalised.
https://www.nzherald.co.nz/nz/covid-19-coronavirus-vaccine-tracker-how-…
For the covid deniers here are my guesstimates of how bad it easily could be:
1) we seem to be getting ~1 death a day at present, about the NZ road toll.
2) covid is only really in Auckland, if it were in the rest of NZ it would be 3x as much
3) vaccinations are reducing death rate by ~1/16 for the ~85% vaccinated, so without vaccinations it would be at least 14x as much
4) lockdowns, vaccinations, social distancing, masks, etc are preventing cases spreading. My best guess is by 10x but it could be a lot more.
5) all up the death toll could be at least 420x the road toll without any intervention.
happy for someone to provide better figures.
compared to 8000 heart and 9000 cancer deaths a year -- we have spent 60 bill and all htese restrictions -- but virtually nothign has actually been spen t on our health system -- 120000 cacnelled procedures in this lockdown -- many serious and life threatening -- happy with the vaccination - but its well past the time to get real -- 60 bill spent on our health system would have prevented many of these cancer and heart deaths -- way way more every year than covid will cause
I am in favour of opening up for the vaccinated which is effectively what will happen. I wasn’t a fan of sitting back watching manukau DHB trickle out a few percent more though.
I’m just pointing out would would have happened without vaccination and without lockdown as some people think neither were required.
I also think the traffic light system is fairly good too, it provides some certainty of the future compared to other countries that put all their eggs in the vaccination basket and are now having problems.
overall I give our government an A: some things could have been better but they were still the best in class.
An A?
If I try to put my distaste in the government to one side and be objective, the very best I could muster for them would be a C+.
I deduct lots of points for slow vaccine roll out, MIQ debacles, and the lack of action in the last 20 months in urgently resourcing up the healthcare sector.
I reluctantly give them points for the lockdown approach being the right one (on balance). But the necessity of very long lockdowns has at least partly been because of their other failures.
Yes, Squirrel will be taking a fat fee and excess spread out of the structure too. I'd want to see Squirrel or the orginators take a first loss position so they keep some skin in the game.
You can probably assume that these borrowers are higher risk than what the banks typically lend to.
As a P2P investor with squirrel but one that manages myself and picks investments, the investments are backed by a reserve fund that has to date not been used where defaults occur and do not meet the debt.
I briefly considered the tax advantages of the fund and then quickly questioned as you did why I would invest in a fund that has a fee (direct P2P with them doesn’t) and for a lower return than I can get direct but without the choice about exposure.
My guess is another revenue channel for Squirrel/IN.
Across the ditch, research shows 57% of mortgagees in dire straits if IRs rise. A finance broker veteran states: “surprised to see that so many people came back and said if it goes up by 1 per cent or $300 a month, they’re not going to be able to afford to pay it.”
Another leader of the industry states: “Many Australians are clearly on the brink and are sleepwalking into disaster, living in the false hope that rates will stay this low”
https://7news.com.au/lifestyle/personal-finance/trouble-ahead-for-some-…
Opening up. Hesitantly, more likely reluctantly. Pressure from somewhere. Big business I would wager. Airlines too, NZ way down at the end of the line, why bother any longer. Way back Mike Moore advised his fellow incoming ministers, don’t piss ‘em off. Believe next time, Dr Cullen received a similar serve. Suspect by now this government might well have by now though, taken it beyond the Rubicon.
First home buyers piled into new mortgages in the past month
yet
In only eleven of the 28 urban areas we cover can home loans taken out in October be described as 'affordable' for first home buying borrowers
Banks have migrated away from lending to productive business enterprises because the risk weights can be as high as 150%. Thus around 60% of NZ bank lending is dedicated to residential property mortgages owed by one third of already wealthy households.
So two vaccinations (likely 3 by April) and the border is still only open after a preboarding test, a day zero test, seven days of home isolation, and a day 7 test. Oh but not until Jan/Feb/April
Wow, this vaccine really has saved christmas, I mean summer, oh well at least the "workers" can get in now.
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