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
As we write this, no bank has yet changed its floating mortgage rates in response to the RBNZ +75 bps hike in the OCR. But Heartland Bank did raise its 1, 2 and 3 year fixed rates by a bit more than +10 bps year.
TERM DEPOSIT RATE CHANGES
Finance Direct raised its 18 month TD rate to 7.75%. And ASB raised its 36 month rate to 5.10% which is higher than any other bank for that term. It also raised most of its other rates from 6 months to 5 years to either match or just edge its main rivals for these terms. Cop-operative bank also raised TD rates, as did Xceda Finance.
SAVINGS ACCOUNT RATE CHANGES
So far only brokers with cash management accounts have raised their rate. This includes Jarden's Direct Broking and Forsyth Barr
FHBs TAKE A RECORD SHARE OF HOME LOANS IN OCTOBER
Banks made just under $5.6 bln in new mortgage commitments in October, up nearly +9% from September, but down a very sharp -27% a year ago. The share of new mortgage commitments to first home buyers increased to a record high of 21.8%, a full percentage point higher than the previous record high of 20.8% recorded in August of this year. The share of new commitments to other owner occupiers decreased from 62.5% to 60.5%. The share to investors increased from 15.8% in September to 16.3%. More here.
FARM SALES LOW. AGENTS BITTER ABOUT THE SITUATION
The REINZ is headlining the "tension" in the rural farm sales markets in October. They report a "large surge" of farm properties for sale, but that transactions completed remained very low in October after the -50% fall in September. November is usually a strong sales month, but there was no indication in the REINZ report that this will materialise, although the hope is there. Agent frustration is evident in the tone of this Report. If it wasn't for good sales in Southland, the situation would have been more dire. "On the positive side, extended periods of rain over much of the country is providing great conditions for spring grass growth and crop emergence, which is really pleasing for those on the land."
NO SPRING IN LIFESTYLE BLOCK MARKET
Agents are unhappy with sales volumes for lifestyle blocks as well, blaming rising interest rates on the fading interest in this segment. Sales data for the three-month period ending October reflects an inexorable easing in the volume of sales of lifestyle properties, down -28% from the equivalent period 12 months ago, and down -54% on the volume of sales achieved during the same period two years ago.
GOOD ON AVERAGE, BUT FAR FROM SATISFACTORY
The Treasury today released its first "big picture" overview of wellbeing in New Zealand. The report draws on the Treasury’s Living Standards Framework and He Ara Waiora, a framework that helps the Treasury to understand waiora (life), often translated as a Māori perspective on wellbeing. Overall, the report tells us that we are healthier, better off and safer than previous generations. Compared to many other developed countries, New Zealand is a good place to live, the report concludes. "However, there are areas where we do not perform as well as other developed nations, areas where we are doing worse over time and there are differences in wellbeing within Aotearoa New Zealand. One of the most striking insights is that our younger people fare less well on many measures than older people. In particular, higher levels of psychological distress and declining educational achievement for younger generations raise risks for wellbeing across their own lives and future generations. The young are also more likely to be priced out of the housing market or to be renting poor quality homes."
ALCOHOL USE SLIPS
New data shows that after peaking in 2011, national alcohol consumption flatlined in absolute terms until the start of the pandemic. It then rose sharply over the subsequent year, and has now started to fall back. But it has fallen on a per capita basis since 2011. It's no longer our drug of choice, legal as it may be. The data doesn't show the damage it does however, just the volumes the alcohol industry distributes into the community.
STILL ACCESSING 4.25% FUNDING
Speaking of drugs (!) another bank helped itself to $170 mln yesterday to the 3 year funding in RBNZ's Funding for Lending program. It's likely to be by a challenger bank. They are paying 4.25% pa for that. The total FLP disbursed is now $18.7 bln. There are only two or three weeks left until this program closes its access window.
NZGB BOND BIDDING EXTREMES
Treasury tendered three tranches of bonds today and all three delivered unusual results. The $200 mln April 2025 only got $200 mln in bids so all 19 were accepted. The average yield was 4.59% pa, compared to 4.52% two weeks ago. Treasury will be nervous if they can't get away any specific tranche. The other extreme was evident for the $150 mln May 2032 offered. It drew $609 mln in bids but only one bidder won all of it at 4.13%. That was down from 4.43% two weeks ago. They were unusually keen. There was a very keen bidder for the $50 mln April 2037 offer too. That one bidder won it all, leaving the other 23 without anything. They got this at a yield of 4.32%, down from 4.66% two weeks ago.
SWAP RATE SETTLE OUT
Wholesale swap rates were sharply higher yesterday, but today may have settled slightly lower. The real action comes near the close as market participants continue adjust for the hawkish RBNZ views of what is to come. Our chart will record the final positions. The 90 day bank bill rate is up +7 bps at 4.39%, although most of this reflects a surge yesterday after the RBNZ MPS. The Australian 10 year bond yield is now at 3.56% and down -2 bps. The China 10 year bond rate is at 2.81% and down -3 bps. The NZ Government 10 year bond rate is now at 4.17%, down -10 bps and now below the RBNZ fix for the NZGB 10 year which is up +9 bps at 4.20% (also mostly a 'yesterday' effect). The UST 10 year is now at 3.69% and down another -7 bps from this time yesterday.
EQUITIES RISE
The S&P500 ended its Wednesday session up +0.6% in New York today in an extended set of gains. Tokyo has opened up +1.3% today, and Hong Kong is up +0.6% at their open. Shanghai has opened up +0.3%. The ASX200 is up +0.3% in afternoon trade, but the NZX50 is down -0.3% in late trade.
GOLD FIRMS
In early Asian trade, gold is at US$1754/oz and up +US$14 from this time yesterday.
NZD FIRMER
The Kiwi dollar has surged +1c and is now at 62.5 USc after the outsized OCR hike. Against the AUD we are holding firm at 92.7 AUc. Against the euro we are still up at 60 euro cents. That all means our TWI-5 is now at 71.2 and up another +30 bps from this time yesterday.
BITCOIN FIRMS
Bitcoin is now at US$16,551 and up +2.2% from where we were this time yesterday, a second day of gains. Volatility over the past 24 hours has been modest at just over +/- 1.6%.
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102 Comments
New working paper from a Harvard PhD suggesting that it "makes sense for many central banks to hold a small amount of Bitcoin under normal circumstances, and much more Bitcoin if they face sanctions risks."
I can't see Kaumatua agreeing but anyway.
https://www.politico.com/newsletters/digital-future-daily/2022/11/22/ha…
Wow alcohol sales are falling, I suspect some nervousness in the craft brewing market. Box of 18 440ml Lion Browns cost me $29.99, Not hard to walk past $10 cans. There is a liquor shop on almost every strip mail, next to every diary in Auckland, About a 1/3 of NZers also consume non legal drugs, Imagine the amount of money the gangs are making out of this....
Funny in all the ram raids, I have
Not heard of one tinny house being ram raided? Why - CONSEQUENCES!
Gangs are not soft on crime against Gangs......
Re credit availability / farm sales - Famous quote from an Ex Citibank chief
The former Citigroup chief executive infamously said in July 2007, referring to the firm's leveraged lending practices: “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you've got to get up and dance. We're still dancing.”8/04/2010
You have to ask yourself... in NZ, at what point do the NZ Banks start to have a real impact on the NZ market by not just pricing credit higher, but starting to have a heavier hand on the amount that can be borrowed. Any change in credit policy could be complicated.
Is this impacting farm sales or are buyers just a bit wary..... ?
I suspect some nervousness in the craft brewing market. Box of 18 440ml Lion Browns cost me $29.99, Not hard to walk past $10 cans.
The craft beer and food industries are going to get slammed hard. I don't want to sound like a broken record but the maginal spend on discretionary is where it will all start kicking in, if it hasn't already. I've done work globally on this for the likes of P&G on consumer behavior, particularly with trading down.
Oh dear, I had some time in Dunedin in the 70s and regrettably I can only concur. Used to park before work up above the brewery itself and some mornings, as I trudged down past, felt like a bloody big bomb in the site would do everyone a favour, especially me. Of course then many years later the EQs put paid to the old Wards brewery in ChCh, a beer that wasn’t so bad. Just goes to prove, be careful what you wish for.
"It's a hard road finding the perfect woman, mate"
Might be looking in the wrong country...
(30 minutes video)
OK, just got a quote to thin a block of trees. $1200 per hectare. 10yrs ago in the same area $400. I am not complaining but just want to bring to light the cost of labour now. I was a shearer for many years and talking to a mate who is still contracting he said the competition from other sectors is making it very difficult to compete for workers as raising a sweat now seems to be something the young don't want to do.
100%. Expect to pay 35-40 an hour for semi skilled manual labour.
You can probably get a numpty for 25 but that's so close to working minimum wage they're unlikely to bother doing anything physical.
On the plus side anyone keen can earn better money than a lot of people riding a desk for a living.
Commercial banks are taking their time about raising their mortgage rates. I wonder why? With most of the 'banks' books in residential loans they can probably see the minus 20% from peak now & are casting an eye to the possibility of a minus 30%. That's my pick for the banks beginning to hurt.
Of course old people do relatively better than young people in this country.
- We spend nearly 20 billion per year on their living costs, nearly 10 times what we spend on children through working for families. Super is also not clawed back based on income levels, unlike WFF.
- Huge intergenerational transfer of wealth from the young to old by rising house prices.
- Older generations pulling up the ladder behind them through significantly higher university fees.
Jobs may be relatively better paying now, and various living standards have improved, but the above set children back maybe 10 years when the leave secondary school compared to older generations.
Nope, its been changed. Indexed to CPI, but also not allowed to fall below the old wage indexation method either.
Amazing how they can index super, but don't seem to be able to index tax brackets..
Hmmm. state sector as in the Nurses. Orr specifically chose to say no increase in remunation re Salaries and wages. Ignores the state sectors who have remained well behind the curve. well we know what far too little far too late has and is choosing for the med sector.
During the pandemic I recommenced my home brew after over a 25 year break. It was something to do & ordering all you need on line helps.Had just the one bad result. My guideline is “would you pay for this in a pub” and yes I would and unpaid friends agreed. So I have carried on with the hobby. By a rough calculation all up it equates to between 65 - 75c for a 330ml bottle. Muntons English bitter range are ideal. It’s easy to do but also easy to make a mistake, hence the dud batch.
Easier to make good all grain simple 5% beer and leave the complex sours and hazies to the pros.
With dried yeast and buying 25kg sacks of NZ pale ale malt you can easily make beer for $2 a L, and buy kegging there is no more messy bottle cleaning.
Home brewing is going to take off again, as it does every recession. I am a home brewer and a BJCP judge. I do not resent the $10 it takes to get a can of craft to a local shop, the brewer only gets about $1 of that.
Travel around New Zealand as we have, fishing. You will encounter more males above the 65 age mark either living in the backs of their cars and barely surviving. Talking to them they either had been divorced, or had invested in some of the eighties horrors. We decided there and then don't be too smug.
Someone 65+ living out of their car alone gets paid $540/week by the government, no questions asked.
Someone 25-65 living out of their car alone gets paid $360/week and has to jump through a variety of hoops to get it. Let alone those 18-24 that will only get $310/week and the same hoops.
Tell me who's better off?
"FARM SALES LOW. AGENTS BITTER ABOUT THE SITUATION
...... They report a "large surge" of farm properties for sale, but that transactions completed remained very low in October after the -50% fall in September......."
I laugh when is see this sought of statement. The sellers want to market their property and if it doesn't achieve the price they want it is of no consequence to the seller. No doubt with the estate agent egging them on to sell now before the prices fall any further. (The opposite of FOMO where its buy now before the price increase)
If your really want to sell, not market your property, drop the price. It's as simple as that.
Similarly for life style blocks
Sort of, farms are business, sometimes the buyers want to wait and see what happens economically. so no NEED to own the farm, unlike houses. Lifestyle blocks are rarely FHBs as they are big and expensive, so the lack of inner city sales means no buyers.. In Devonport they used to joke about the 3 Ds of house sales being Death, Divorce and Diary Flat, ie their teenage daughters want horses and lifestyle.
I swapped 800 sq m for 157,000 sq m, 7 cows, 38 sheep. and now 5 horses. Its a great lifestyle, very cheap meat and a big vege garden. I will only be dragged back into city if I cannot maintain this place.
No they eat me out of house, FiberPro, etc etc, they are very expensive animals to feed sport horses... but the 300kg beast hanging on the back of the truck is slowly being eaton, as are countless sheep, I was rasied on a sheep farm, they are free food here. being wilshire i dont even have to shear them
Billions/Trillions of cheap money to keep the party going since 2008s "too big to fail" moral hazard Rubicon was crossed, all provided by RBs & ultimately to be funded by all future net taxpayers went looking for assets - houses, land, crypto & shares, NFTs, company share buybacks...tulips...
Modern Monetary Theory was that the account would never have to be paid.
Does anyone else find the Rockfield Terraces house ads to be a bit strange.
Like bringing Coals to Newcastle.....
this is interesting https://www.oneroof.co.nz/4-platina-place-flagstaff-hamilton-city-waika… last sold for 875k august 2017
Homes.co.nz has estimate 1.8mil and a cool 4k per fortnight estimated mortgage... mmmmmm
Uhh, we all are complicit.
40% of young kiwis contemplated self harm or suicide last year.
My guts saying it's because everyone lives compartmentalized lives through a screen, which is the direct opposite of the natural environment for a homo sapien. All my kids mates cite loneliness or isolation as the thing that affects them the most.
No government can fix this.
Whenever I hear people complain about 'young people these days', I try to explain to them the many ways in which things are a lot worse for young people now than they used to be. And I'm not that old (I'm a millennial), but when I was at Uni the expectation was that Uni would be a few years on the bones of your arse and then you would probably be able to get a decent enough job to afford a house and then kids and eventually retire. That didn't end up happening for a lot of millennials, but at least the expectation was there. Nowadays young people leaving school know there's a pretty good chance that unless they get a job with a pretty spectacular pay packet (top 5% or so) they'll likely be on the bones of their arse for a decade saving for a house and then again while having their kids and then again while saving to afford a bones-of-their-arse retirement. And that's if they are lucky and major climate change related disasters manage to hold off until they are dead or old enough not to care.
Yes and the boomer generation buying their houses at 3x incomes and retiring with them at 10x incomes.
Or with nominal prices being about 20x the price they paid for them (first home for $40,000 in 1980 and is now worth $800,000 or more...).
If these conditions repeat for current milennials, they could expect their $1,000,000 first home purchased in 2020, to be worth $20,000,000 when they retire in 30 years time.
Possible...but the average income will need to rise to around $2,000,000 a year by 2050 to maintain the 10x income ratio! Not sure the RBNZ would be happy about this level of wage inflation...
It's not necessarily about home ownership, but stable housing would go along way to mitigating a lot the problems. And unfortunately given the way things are in NZ right now, it's pretty difficult to get stable housing unless you are a home owner. I'd bet that in the places you are thinking about home ownership rates might be lower, but the rental market isn't anywhere near as horrible and insecure.
We have the highest rent-to-income ratios of any developed country.
Almost every person you will see at the foodbank is a renter. And almost every one of them is paying too much rent.
Something nasty and insidious crept into our society. It became socially acceptable to squeeze unreasonable sums of money from renters. To take advantage of a housing shortage for personal profit.
A culture of vampire squids. All telling themselves that they are "only charging market rent". It has caused widespread social harm.
Technically we're 7th in the OECD at 25% of disposable income (page 2 of the following) behind all Scandinavian countries with the highest being shy over 30%.
HOWEVER, note 1 states that Gross Income is used for New Zealand. So what happens when you take out tax, and student loan payments???? which are all pre-disposable income.
https://www.oecd.org/els/family/HC1-2-Housing-costs-over-income.pdf
What's worse is when it's justified by saying "well Landlords have costs, mortgages etc". So society has enabled Landlords to leverage and borrow greater and greater sums and just pass this cost on to tenants, with the taxpayer picking up the shortfall.
Which is what really irks me when people bleat on about negative tax contributors. Maybe we could drop working for families, and coincide with that a legislated drop in all active rents by the average WFF weekly payment amount. Voila, more net tax contributors.
So my top stock performance of the year (+20% in NZD I think) may surprise you.
Its McDonalds.
With Covid now "out of sight" its an easy one. Great product, hugely in demand, they can raise prices if they need and people will still buy.
Second performer is Coke, with Hersheys not far behind.
Go figure. Its not like this is an industry that will ever be regulated or taxed more
We all know the Ray Krok story, but diversification can be a drag if it goes wrong too many times?
"McDonald's, confirmed its closure of operations in Russia and put its stores up for sale, at a cost of between $1.2 and $1.4 billion"
and....
"McDonald's Latest Dessert Partner Plans to Shutter 14 More Locations in 2023....The 85-year-old donut giant attributed the store closings to their inability to stay profitable with the company's current business model. "
https://www.eatthis.com/krispy-kreme-closing-14-locations-2023/
Seriously, sad, worrying day in Auckland with what unfolded overnight in Sandringham. I have had family move to Auckland and I enjoy the city, having only recently made its acquaintance. If in a city, any city any place, you cannot feel safe on the streets, in the parks, in the shops, and worst of all your own home, then that signals everyday life has been altered to the point of abnormality. Christchurch is ditto.
I had a couple of appointments in Wgtn CBD for 3.5 hrs this morning, first time I've been in there all year. Caught the bus in (Gold card ;)) because parking now such a pain to find & expensive.
Courtenay Place, Taranaki & Dixon street areas really depressing: many vacant buildings, more strip joints & wandering hoodies & ferals.
I used to drop into that dairy on my way home from primary school in the late sixties.
It is getting dangerous out there. The NZ murder rate for 2019 was 2.63 per 100k, a 253.88% increase from 2017 and it has stayed up there since.
https://www.macrotrends.net/countries/NZL/new-zealand/murder-homicide-r…
Now we seem to have some post COVID madness afflicting the nation. Time to admit that home detention has failed miserably.
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