A review of things you need to know before you sign off on Thursday; Westpac raises fixed rates too, QV sees falling house prices, TA sees a grim housing market, traffic activity good, swaps steepen, NZD slides, & more

Here are the key things you need to know before you leave work today (or if you already work from home, before you shutdown your laptop).

MORTGAGE RATE CHANGES
Westpac has added +36 bps to their one year fixed rate, taking it to 4.85% and matching Kiwibank and ANZ. They have also raised their 6 and 18 month rates by similar amounts. HSBC advised it is raising its floating rate by +40 bps to 5.89%, effective for existing borrowers on June 27, 2022. Kiwibank extended its cashback offer to 1% and a max. of $10,000.

TERM DEPOSIT & SAVINGS RATE CHANGES
None so far today.

IN DECLINE
The May QV House Price Index shows average dwelling values are now declining in almost every part of the country. Average house values in Auckland down by more than -$70,000 since the start of the year.

FEAR OF OVER-PAYING
In fact, forget about FOMO, FOOP now rules the roost as the housing market cools rapidly. A Tony Alexander/REINZ survey paints a grim picture of the national housing market.

REASON TO BE POSITIVE
ANZ's May truckometer survey shows their Light Traffic Index held onto the previous month’s jump, while the Heavy Traffic Index (trucks and buses) dipped a little, but remains on its upward trend. Overall, the data continues to show the economy settling back into its rhythm as the disruption from Omicron gradually wanes, they say.

A MARKET-FRIENDLY WIND-DOWN
The RBNZ has revealed how it is going to sell-down the bonds it acquired during its quantitative easing program at the start of the pandemic. It holds almost $54 bln, and plans to offload $5 bln per year through to 2027, which should see all the holdings built up in the LASP then quit. Some will be via natural maturity, the rest via sale back to Treasury. That way secondary markets won't be affected.

$10 BREACHED
The dairy analysts at NZX have issued their first 2022/23 farmgate payout forecast using their calculator and it suggests dairy farmers are heading for a $10.40/kgMS return. If that actually transpires, that is a +12.5% rise from the $9.24/kgMS rate they have picked for the current 2021/22 season. Other analysts have had a shot at estimating 2022/23 already but none has suggested a rate over $10/kgMS yet. Fonterra itself has suggested a mid-rate of $9/kgMS. See the bottom of this page for the comparisons.

BNPL TO BE REGULATED LIKE BANKS
The new Australian government seems to have decided that the Buy-Now, Pay-Later sector is to be regulated under their credit protection laws. That makes it likely we will follow soon after.

CREDIT ANALYSTS LOVE BANK MORTGAGE BOOKS IN A RISING RATE MARKET
In an assessment of a proposed a ten year non-call five year (10NC5) tier 2 bond issue by ASB, Fitch says they like ASB's prospects and relative strength. One thing they particularly like is ASB's heavy exposure to mortgages. "The banks are a good beneficiary of the hiking cycle, and ASB’s 1H22 net interest income increased 13% to NZ$1,275 mn. This was thanks to both good loan growth (up 8% to NZ$102.1 bn) and a better NIM (up 12 bp to 2.24%). The NIM itself had improved due to better term deposit margins, lower wholesale funding costs, and higher transaction and savings deposits, partially offset by lower margins on mortgages."

MIRAGE CHANGES
The Government's ham-fisted and rushed changes to the CCFA regulations that caused an outcry from banks, borrowers and mortgage brokers are to be changed. The revised regulations will remove regular 'savings' and 'investments' as examples of outgoings that lenders need to inquire into when assessing the borrower's likely expenses, clarify that when borrowers provide a detailed breakdown of their future living expenses, and these are benchmarked against robust statistical data, there is no need to also inquire into their current living expenses from recent bank transactions. And they will clarify that when lenders estimate expenses from recent bank transaction records, they can ask the borrower about how expenses are likely to change once the contract is entered into. But bankers think this is just window dressing, saying the changes have raised hopes of a solution that hasn’t been delivered.

SWAP RATES STEEPEN
We don't have today's closing swap rates yet but they have probably firmed and in a steepening trend. The 90 day bank bill rate is unchanged for a second straight day at 2.52%. The Australian 10 year bond yield is now at 3.60% and up +9 bps. The China 10 year bond rate is now at 2.82% and unchanged. The NZ Government 10 year bond rate is now at 3.85%, and up another +9 bps from this time yesterday and below the earlier RBNZ fix for this bond which was up +11 bps at 3.87%. The UST 10 year is now at 3.05% and and up +6 bps from this time yesterday in a steady rising pattern.

EQUITIES FALL
On Wall Street they finished weakly, with the S&P500 down -1.1% at the end of their Wednesday trade. Tokyo has opened today up a minor +0.2%. Hong Hong is down -0.3% in their early Thursday trade. Shanghai is also down -0.3% in their early trade. The ASX200 is down -0.9% in early afternoon trade. The NZX50 is down -0.7% in late Thursday trade.

GOLD FIRM
In early Asian trade, gold up +US$4 from this time yesterday to US$1853/oz.

NZD SLIDES SLOWLY
The Kiwi dollar has moved down, now at 64.4 USc, although most of the shift lower happened last night. Against the AUD we are still at 89.8 AUc. Against the euro we are down a sharpish -½c at 60.1 euro cents. That all means our TWI-5 is lower at 71.5.

BITCOIN YO-YOS
Bitcoin is now at US$30,167 and down -2.9% from where we were this time yesterday. A yo-yoing pattern around US$30,000 is continuing. Volatility over the past 24 hours has been moderate at +/- 2.0%.

This soil moisture chart is animated here.

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