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
BNZ raised fixed rates today, but less than their rivals. More here. The Cooperative Bank also raised all fixed rates. And three buildings societies did too, Wairarapa, Nelson and Heretaunga. Update: SBS Bank has now raised all its floating, fixed, and reverse equity rates
TERM DEPOSIT RATE CHANGES
Those same three building societies also all raised term deposit rates (independent of each other), as did NZCU Auckland. Update: SBS Bank has raised almost all its savings and TD rates.
AGENTS THINK HOUSE PRICES ON WAY DOWN
House prices are expected to resume their downward trajectory according to the latest survey of agents by Tony Alexander and REINZ. They are anticipating another wave of house price falls in the new year.
CONTRUCTION PEAKED?
A record $9.3 bln of construction work was completed in the September quarter, taking the annual total to $33 bln, both new records. $5.6 bln was new residential construction ($20 bln for the full year). Of that $3.6 bln was in Auckland ($13 bln for the year). Will it continue? It seems unlikely with Infometrics observing that "residential activity [will decline] more rapidly as the downturn in the housing market filters through to consent numbers and building activity".
NZ FINTECH COLLAPSES
NZ Fintech Group, which owns high-cost high-risk lenders moola.co.nz and Zooma car finance is being liquidated after failing. Controlled by Edward Recordan of Christchurch, the Group went on a funding binge to scale up. But ironically, its debts overwhelmed it. (Interest.co.nz refused to take any ads for NZ Fintech when they were pitching for public subscriptions.)
DOMINANCE UNDER REGULATORY ATTACK
The Commerce Commission has found that rebates paid to merchants to sell building supplies like GIB are hampering competition. The focus is squarely on Fletcher Building and its strategies to hold on to its dominant position.
A LOT LYING AROUND
According to a new RBNZ survey, more of us are using cash to pay for everyday things, and less of us are using credit cards. The use of cash is now up to 50% of the population, having started at 47% at the beginning of the year. For credit cards, it started at 46% and slipped to 44% by December. But now 80% of us use debit cards for those everyday transactions which is a new high, and 16% of us swipe with our phone digital wallet. Interestingly, more than 22% of us no longer have a personal store of cash, and 28% of us have less than $50 stored somewhere. 29% of us have between $50 and $500 stored for a rainy day. 6% have $500-$1000 stored, 5% have $100-$5000 stored, and 2.4% of us are hoarding more than $5000 in cash notes & coins. That equates to about 130,000 people with more than $5000 salted away at "home" for emergencies, in total probably more than $6 bln. That seems rather a lot just lying around.
EYES ON THE RBA
Markets are awaiting the RBA rate decision at 4:30pm today. We will update this item when the result is known. a +25 bps rise is expected taking the current 2.85% rate to 3.10%. Update: The RBA did indeed raise its cash rate target by +25 bps to 3.10%.
AUSSIE RURAL SECTOR HITS ITS STRAPS
We all know of the damage storms have caused on Australia south east states. But La Niña will push farm gate output there to a near-record AU$85 bln this year as those problems are offset by almost perfect conditions elsewhere.
SWAP RATES FIRM
Wholesale swap rates were likely firmer today on global trends. The real action comes near the close however. Our chart will record the final positions. The 90 day bank bill rate is unchanged at 4.45%. The Australian 10 year bond yield is now at 3.36% and and down -2 bps from this time yesterday. The China 10 year bond rate is at 2.94% and unchanged. The NZ Government 10 year bond rate is now at 4.03%, and up +3 bps and now above to the earlier RBNZ fix for the NZGB 10 year which is down -2 bps to 3.97%. The UST 10 year is now at 3.57% and up +4 bps from this time yesterday.
EQUITIES LOWER
The NZX50 is down -0.4% in late trade. The ASX200 is -0.3% lower in afternoon trade. Tokyo has opened opened flat (+0.1%). Hong Kong has given up -0.6% after yesterday's bull run. And Shanghai is down -0.2% in early trade there. Wall Street ended lower in Monday trade today, with the S&P500 down -1.8% at the end.
GOLD LOWER
In early Asian trade, gold is at US$1775/oz and down -US$28 from this time yesterday.
NZD SLIPS
The Kiwi dollar has retreated from yesterday's heights, now at 63.4 USc and down -¾c. But it was down more than that earlier, and a partial recovery is underway this afternoon. Against the AUD we are up to 94.4 AUc. Against the euro we are down at 60.3 euro cents and a -½c fall. That all means our TWI-5 is now at 71.9 and down -40 bps from this time yesterday
BITCOIN HOLDS
Bitcoin is now at US$17,055 and down -0.9% from where we were this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.6%.
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41 Comments
So as things get tighter people like doing "Cashies".......
Also re TA - he is no longer giving forecasts such as market will fall 15% from peak?, just general direction now as down?
I wonder if it's folk spending the covid cash that they withdrew to hold in case things went pear-shaped?
Maybe, or hard times are pushing people into cash jobs and tax evasion.
I've noticed that most independent retail outlets are always keen to receive some folding stuff...
NZD strengthening against AUD and JPY.
What's stopping the carry trade now? Borrowing in JPY and buying NZD? For the avge punter, probably not enough skill / acumen / resources to hedge appropriately. For those in 'the game', I'm guessing it's an attractive play. Wonder if anyone could enlighten me as to why it's not.
I'd expect the hedging cost to eat up almost all of the difference.
The increased velocity of cash doesn't come as much of a surprise.
The number of people who now get paid in cash just as a matter of routine, end up then using it to make their next payment in cash, just to 'get rid of it', and so on. What else are they going to do with it? Go and deposit it in the bank? Where would that be, given bank stores are now few and far between.
What about under the mattress?
Interest.co.nz refused to take any ads for NZ Fintech when they were pitching for public subscriptions.
Slow clap for Interest.co.nz integrity.
*Clap
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*Clap
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*Clap
Yes well done. But in general there is a history of the NZ media taking the money from these types of businesses incl property ones. Especially when they are fronted by ex All Blacks, politicians or other "celebrities". Who are in general not finance experts and would almost certainly not monitor the health of the company they are endorsing on a monthly basis to verify that they are a going concern.
Leftie media are circling to protect their own in the cryptosphere meltdown. But they miss the point completely regarding regulation. It's not the lack of regulation that was driving people to FTX International. It was the lack of clarity from the SEC surrouding regulation.
https://www.theatlantic.com/ideas/archive/2022/12/ftx-crypto-currency-s…
This week, ASIC Chairman Joseph Longo told Australia’s Parliament that Australians should not invest in crypto currencies unless they are "prepared to lose all their money". Yet ASIC allowed FTX to take over a company that already held a trading licence in Aussie and and did not assess FTX at all. Go figure.
https://www.theguardian.com/australia-news/2022/nov/23/ftx-bypassed-reg…
Would that leftie media include Max Keiser on Tucker Carlson's show?
Well the 'rightie' media are not that flash either : dear old Hosk just loudly announced Spain beat Morrocco in the FWC.
"Inflation is too high at 6.9%. A further increase in inflation is expected over the months ahead, with inflation forecast to peak at around 8 per, and the Australian economy is continuing to grow solidly. The unemployment rate is the lowest rate since 1974." the RBA said, "So let's get on top of it with a 0.25% cash rate rise".
Interesting that the SMH is reporting that mortgage rates in Aus are expected to rise to ~6.5% on the back of the increase of their policy rate to 3.1%. Seems strange that NZ should have tighter margins but seems like that must be the case.
Or Lenders are smart enough to realise 3.1% isn't the end of it, by a long shot.
bw, as an older identity, my introduction to economics was in the early 60s, Rufus Dawes et al, it still runs against the grain to me at least, that unemployment is a tool that should be used to control inflation. Thus my ideology, unemployment bad, inflation bad and it’s only in algebra that two minuses make a plus. We were also taught pretty damn definitively that governments of nations that resorted to printing money hand over fist, then spent hellbent, but with small regard to structured and targeted growth therefrom, would soon have a screaming baby named Inflation plonked on their doorstep. There it is and here we all are then. What say you to that, wind from the past.
NAIRU has been largely discredited by several studies over the last couple of decades. It seems that the RBNZ & Bank macroeconomists never progressed their thinking beyond Econ 101.
I would say you're spot on and that fundamental truths stand the test of time...
Haha
Having said that their retail rates are much more sensitive to OCR changes given the predominance of floating rates.
Hey HouseMouse, so if house sales volumes have fallen 50% and then prices fall 50%... what happens to total commission numbers? Can Any business survive this type of fall, what would the changes look like? Would they like landlords, simply put their commissions up?
I welcome other views as well.
Many female agents have a wealthy husband or sugar-daddy supporting their hobby
There are a few female agents out there that could be considered Sugar-Mommas
Wise guys in the business know that selling real estate is like farming--be prepared for a run of bad years, especially following years of bursting silos.
Most agents I know have a portfolio of renters, which give them their bread and butter, regardless of their sales commissions.
I suspect there would be limited ability to raise commissions in a dead market. People will just lose business and there will be consequences.
Anyhoo, prices won’t drop 50%. The economy will be a mess by mid 2023, and interest rates will start being cut sooner than most think. Price falls will bottom out 20-25% down.
The market will start stabilising ( note ‘stabilising’ not growing) by late 2023. Some will survive. Many won’t.
20-25% we are already there......... don't be ANZ and keep dropping the forecast, think bottom up, be bold think whats a property worth on a yield basis.... Yield last made sense to me in 2011-12 when people could flip 30-40 houses a year with their eyes shut hm....
"So let's get on top of it with a 0.25% cash rate rise"
It's all about the property ponzi for the RBA. They know they can't explicitly say, even though they've smoke signaled it.
I have a new theory about house prices. It has been the land value that has appreciated over the last decade or more, in some cases the value of improvements has actually gone down. Maybe we will see a shift where land prices go down rapidly, but improvements go up as the cost to build is going up. The crap house on a big section that developers were paying stupid money for 1yr ago could drop a lot more than a nice house on a smaller section.
Yes thats what I am seeing right now from Barfoot auctions. Larger Developement sites with a rubbish house are selling around 31% off cv , last nov 10-15% above cv. Ouchy Ouch. Still most of the sellers have held a long time so as TTP says, there is no real pain.
I am keeping an eye on the one I sold in Nov 21, maybe I will have an opportunity to buy it back once its fallen 50% (or more) off cv, better call the bank, things are moving. I better be quick.
Careful. Your judgement could well be clouded with respect to that property. Sentimental reasons should not come into it. For example there is no reason why you should not look at the property next door to it with just the same enthusiasm.
Yes I am divorced.... never go back.
I have exhibited plenty of enthusiasm.
You are right JJ. Our 1st house nearly 50 yrs ago the section cost 5000 now its 500,000 thats gone up 100 times but to build that same house today would no where near cost 100 times as much.
Yep land prices are the thing which is elastic. Which have increased due to women working, mortgage rates continuously dropping (until recently), the term of loans being extended etc. All feeding into land value primarily.
Yes, obviously.
Your last point is a good one. I agree that proportionally a bigger section with a dunger on it will likely drop more in value than a good townhouse on a smaller (but not too small) section.
Proportionally the former would have risen in value more than the latter as well. Although hold the line caller….Wasn’t there a study that said townhouses / apartments typically went up in value by similar % to homes on full sections?
Sections always fall the most, time in 2025 to buy that near the beach bach section.... remember Rodneys Ravings.... (I rate him and read all his posts)
https://www.squirrel.co.nz/blogs/housing-market/rodneys-ravings-seldom-…
With the survey currently at -77% it implies a much larger fall in residential building is on the way; justified by the severely negative state of the drivers.
A fall of 25% or more in residential building activity seems highly likely over the next 18 months or so.
By contrast, in the August Monetary Policy Statement the Reserve Bank predicted only a 6% fall in residential building activity over the next two years. This is tiny in comparison to normal cyclical falls, which are often more than 20%. It's also contrary to what the drivers, the ANZ survey and industry anecdotes predict.
Good to see the back of 'Moola'. Low-lifes.
https://www.roymorgan.com/findings/9122-nz-national-voting-intention-no…
Majority of New Zealanders (55%) believe the country is going in the ‘wrong direction’; National support surges in November as Labour support drops to lowest since June 2017.
Today’s Roy Morgan New Zealand Poll for November shows support for a potential National/ Act NZ coalition surging in November, up 5.5% points in a month to 50%, and now well ahead of the current governing Labour/ Greens coalition on 37.5% (down 7% points).
If only 55% think we're heading in the wrong direction we're actually doing pretty well compared to many countries.
Interest.co.nz refused to take any ads for NZ Fintech when they were pitching for public subscriptions.
Very well done! Thank you
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