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
In case holidaying/cleaning up Aucklanders missed it on Monday Kiwibank has reduced its two year fixed rate to 6.49%, the lowest of the main banks for this term. It also raised its one year fixed rate to 6.49%, matching BNZ and wth TSB at 6.29%.
Among credit unions, Unity also cut its two year fixed rate to 6.49%. Its one year rate is 6.39%
Among non-bank lenders, Basecorp Finance raised its standard floating rate to 8.7%.
In business rates, ANZ has raised its key lending base rates by 40 bp.
TERM DEPOSIT RATE CHANGES
And again, among the things you might have missed on Monday, Kiwibank raised some term deposit rates out to a 12 month term, mostly by +10 or +15 bps. First Credit Union also raised rates. And SBS Bank raised rates, but left its hot 6% one year rate unchanged (it cut its 9 month rate, however).
AUSSIE RETAIL SALES HAVE SHOCK FALL
Australian retail sales slumped 3.9% in December, recording their first drop for 2022 and surprising markets, resulting in weakening wholesale interest rates and a falling currency. ANZ economists said although strong Black Friday sales and a shift to travel spending in late 2022 put downward pressure on December retail sales, "the extent of the fall suggests households have started to cut back on discretionary spending".
NZ MORTGAGE GROWTH SLOWEST IN NEARLY 10 YEARS
New Reserve Bank figures show the stock of outstanding mortgages in the country rose by just $1.1 billion in December - a far cry from the $3 billion-plus figures recorded during the 2020-21 boom. What it means is the annual growth rate for the mortgage pile is continuing to slip, now down to 4.4%, which is the lowest since February 2013. A year ago the growth rate was at 10.5%. Business and agriculture lending both declined in December.
TERM DEPOSIT SAVINGS ROCKET TO NEW HIGH
The were dead, then they came back. What a difference interest rate rises will make. New deposit figures from RBNZ show that household term deposits increased by a whopping $3.737 billion in December, with the total in term deposits now hitting a new record high of $104.987 billion. That's up $21.7 billion, or 26% in the past 12 months. RBNZ said total household deposits increased by $1.9 billion in December to $228.2 billion. Transaction and savings account balances both fell.
CLAIMS COME RUSHING IN
The country's largest insurer IAG said as of Monday it had received more than 5,000 claims across its AMI, State and NZI brands relating to Friday's Auckland flooding. It expects the number of claims to rise further over the coming days, with the event still unfolding and as customers identify damage to their property. Fellow insurer Tower said as of Monday it had received approximately 1,900 claims for this event. Of these around 1,000 are house claims and the remainder are motor and contents claims. It too expects to receive further claims as customers assess their damage. Both insurers say they have substantial reinsurance arrangements in place.
CONSTRUCTION CONSTIPATION
And further to the floods, with a warning that construction projects may be delayed for several months as civil contractors prioritise emergency flood repair work, while Westpac is warning construction costs will stay high as a result of increased demand triggered by Auckland’s storm.
MORE MORTGAGE MARKET MALAISE
Oh, how times change. Two Decembers ago we saw a new record high mortgage advances for a month (subsequently surpassed in March 2021) of over $9.6 billion. In December 2022 little more than $5 billion was advanced - the slowest December in five years.
LABOUR'S LEADERSHIP SHUFFLE BOUNCE
Polls from 1News/Kantar and Newshub/Reid Research out on Monday night both showed support for Labour bounced back to just in front of National, with new Prime Minister Chris Hipkins immediately jumping above National Leader Christopher Luxon as preferred Prime Minister.
MIGRANTS MAKING MOVES
Migrants accounted for more than 10% of New Zealand home purchases last year.
SWAP RATES FIRMER
Wholesale swap rates likely firmed today. The real action comes near the close however. Our chart will record the final positions. The 90 day bank bill rate is up +3 bp at 4.94%. The Australian 10 year bond yield is now at 3.54%, down 2 bp. The China 10 year bond rate is at 3.003%, plus 6 bp. The NZ Government 10 year bond rate is now at 4.208% and up 5 bp. The UST 10 year is down 1 bp to 3.54%.
EQUITIES MIXED
The NZX50 has slipped 0.1%. The ASX200 has started up 0.2% in early afternoon trade. Tokyo is unchanged 0.1%, but Hong Kong is having something of an early lift after Monday's Alibaba-rumour-fuelled 2.7% slump, although it has weakened in recent minutes. It was up 0.1% a short time ago. Shanghai opened up barely changed, edging down very slightly.
GOLD EDGES HIGHER
In early Asian trade, gold is now moving marginally higher, at US$1925/oz, though that is down about US$1 from this morning.
NZD MIXED
The Kiwi dollar is 64.7 USc, down from 64.9 earlier Tuesday. Against the weaker Aussie (on the back of those shock retail sales figures) we are at 91.8 AUc, that's up from earlier by nearly half an Aussie cent. Against the euro we are down slightly at 59.6 euro cents. The TWI is 71.47.
BITCOIN SOFTENS
The bitcoin price has softened in the past 24 hours, though was rallying a little at time of writing to be around US$22,900 and down a little under 3.2% in the past day.
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38 Comments
It seemed like a good idea to me. Why not have someone inside the government cabinet looking after the biggest GDP contributer? Governments have been failing Auckland for years.
Hipkins does seem to do well at press conferences. Explains things well but doesn't take much crap. I'd be worried if I was Luxon.
Creating a Minister for Auckland shortly after Labour retires the Regional Development portfolio and rolls it up into the Economic Development/Tourism (Labour-Greens think the regions are only good for tourism).
Could be part of Hipkins' strategy to give up on trying to please the regions and instead shifted focus on the urban votes.
The net increase in housing is actually quite poor. Because so many get demolished through redevelopment.
In my correspondence with her she has also been incredibly defensive on the status quo approaches, and didn’t engage at all in suggestions I put forward. I don’t mind , at all, people saying a proposal is not desirable or workable, but it would be nice to see some meaningful engagement with the idea rather than just thumping the chest in waffle for three pages about how successful they have been ( which as I say they haven’t been very successful in terms of net houses delivered)
The day of reckoning is also coming for them and their flawed model of relying heavily on the private market. I alerted them to this a year or so ago but they dismissed any notion of a development sector slump….
the other side of my criticism is that their shared equity housing scheme was incredibly poorly thought out and executed. Would be interesting to see the numbers in terms of take up.
She should be dumped from Energy and Resources! Allowing eclectricity retailers to increase the daily charges without sufficient compensation through the Kwh/hr price is inflationary. Abolishing low electricity users programs is inflationary and she precided over the biggest black out since Auckland.
Yeah possibly.
Unemployment will probably rise less than it would have too, over the next 3-4 months, as repair work creates a whole lot of work for tradies and suppliers.
On the other hand, it will probably increase more than it would have otherwise done by year’s end.
So potentially a bigger chance of a greater increase to the OCR in the first half of the year, yet at the same time also a bigger chance of one or two cuts by year’s end.
I admire your optimism. The economy is face-planting, people just haven't spotted it yet because they are looking in the wrong places. For example:
- Annual change in current account balances turned negative in September and this indicator is now plummeting - a combination of people spending more money than they are earning and those with money sticking it into term deposits. Demand is collapsing and will drop further
- Broad money (current accounts, savings, and term deposits) increased by under 2% year-on-year to December 2022. It has only been this low three times in the last 30 years - 1992, 1999, and 2009 (all vintage years!!!)
- Interest payments are escalating quickly - and we have tens of billions of mortgage dropping of fixed rates in the next few months. With higher prices in the shops, and less money in the pocket, the situation is perilous
- Now - let's nail the wages are booming myth. Earnings per filled job increased in real terms (adjusted for CPI) from post GFC onwards. That real wages growth stopped in mid-2021 and has been stagnant since.
See you on the other side.
Notable but not mentioned here is how agriculture again is saving Labour's bacon. We are doing a lot of trade with South Korea.. Unfortunately the Labour govt put up more barriers than opening opportunities. I hope we see a change. Otherwise National and Act have an opportunity to knock at Labour's hate of the Ag sector.
Health cuts don't heal.
Too right.
I had Cardiology checks a year ago at North shore Hospital.
Last week I received three emails pleading me to make an appointment with the Cardiology Waitaikeri Hospital, as it was urgent. Made it and am booked for a phone consult.
My ICU specialist nurse daughter nearly wept.
I am resigned. I am old.
I don't know much about this hospital stuff so just checking: Does your post mean it took North Shore Hospital a year to come back with the results of your cardiology tests? And after a year of waiting you learned that you need urgent attention?
My Dad (late 80s) is finding health care hard to get in Tauranga - everything very busy and have to book weeks ahead.
Problem is the bulk of purchasers over the last 5 to 10 years will completely wither and financially implode when the coming mortgage rates reset well past 8% 2023/2024 and hold......as this inflation is like sticky epoxy on a blanket.
Inflation is going to rocket again, these NEW billions of re-insurance money that's going to flood NZ (I know 5x people making significant claims) and the oil price about to go nuts, with China opening up and long distance flights now surging in a big way again.
These massive Debt grenades, buried in every country, will certainly explode.
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