A review of things you need to know before you sign off on Monday; more mortgage changes, Kiwibank moves savings rates, talk of OCR cuts this year, RBNZ's bank capital weightings for BGF investments, swaps firm a little, NZD still sliding, & 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
Co-operative Bank tweaked its six-18 month fixed rates, all by 10 basis points and all to the same new rate. The owner-occupied rate increased from 6.35% to 6.45%, while the standard product increased from 6.85% to 6.95%. 

Kiwibank followed its comprehensive range of changes to fixed lending rates late last week with a 50 bps rise to its floating rates, wiht the changes applicable from Monday for new lending and May 8 for existing mortgages. The variable and offset variable rates both move to 8.25%, while the revolving rate is now 8.30%.

TERM DEPOSIT/SAVINGS RATE CHANGES
Kiwibank's moved it 90-day notice saver up by 35 bps to 5.10% while the 32-day notice save moves up 40 bps to 4.55%. Kiwibank's call rates all move up by 50 bps to a base rate of 4.35%. (The business on-call rate also has 0.05% bonus rate on top.) 

RATING THE CHANCES OF RATE CUTS
Kiwibank economists are pencilling in an Official Cash Rate cut in November of this year. They are confident inflation's past its peak after the drop in annual inflation last week to 6.7% from 7.2%. They expect one more OCR rise, (which they don't think is needed) to 5.5% in May. More widely, market pricing on the wholesale interest rate markets is increasingly looking at the possibility of OCR cuts this year - with the possibility of a cut seen as early as October.

RBNZ TO ALLOW FAVOURABLE CAPITAL TREATMENT FOR BANKS' INVESTMENTS VIA GOVT'S PROPOSED BGF
The Reserve Bank has confirmed banks will have a 250% capital risk weight for equity investments made via the government's proposed Business Growth Fund (BGF). That's below the 400% risk weight their equity investments typically require. The 250% risk weight is in line with what the Aussie parents of NZ's major banks get for investments made via Australia's BGF. The Reserve Bank says this capital treatment will be capped at investments of up to 2% of a bank’s common equity tier 1 capital, also in line with Australia. Last year's Budget proposed a BGF, along the same lines as ones up and running in Australia, Canada and the UK, to improve SMEs' access to finance. Up to $100 million was earmarked for Crown investment as a minority shareholder in the BGF alongside banks. This followed a recommendation from the Small Business Council's NZ Small Business Strategy in 2019 to establish a BGF.  See more on the proposed BGF here.

TOWER CREDIT RATING AFFIRMED
Global credit rating agency AM Best has reaffirmed Tower Limited’s Financial Strength Rating as A- (Excellent), with a stable outlook, after completing its annual review. Tower’s Long-Term Issuer Credit Rating was also affirmed as a- (Excellent), with a stable outlook. AM Best assesses Tower's balance sheet as very strong, as well as its operating performance, business profile and enterprise risk management. AM Best also noted Tower’s prudent capital management and that AM Best expects Tower’s risk-adjusted capitalisation to remain at least at the very strong level over the medium term. Tower Chair, Michael Stiassny said the confirmation recognises Tower’s strong performance as it remains resilient following recent large events while continuing to support customers and communities.

HOME DETENTION FOR TAX EVASION
A Bay of Plenty man, who claimed his company was not subject to New Zealand law, has been sentenced to home detention on six tax evasion charges and ordered to pay $30,000 in reparations. Stephen George Gibson Clark of Opotiki claimed his agricultural and fertiliser business company Probitas Systems NZ Limited (“PSL”) was vested in a Maori trust and was not subject to New Zealand laws. However, Inland Revenue told the company many times that there was no basis in law for this position. Despite multiple requests, Clark had failed to supply information in relation to the company’s tax affairs as required under Section 17 of the Tax Administration Act 1994. That meant PSL evaded a minimum of $55,919.58 of income tax and GST.

BANKS SEE 'SUBDUED' MORGAGE BORROWING CONTINUING OVER NEXT SIX MONTHS
The country's banks are telling the Reserve Bank that borrower sentiment 'will likely tend towards more caution' due to the fast-changing housing market conditions

SWAP RATES FIRM SLIGHTLY
Wholesale swap rates are probably slightly firmer Monday in what's a quiet day ahead of a public holiday. However, the real action in swap rates comes near the close. Our chart will record the final positions. The 90 day bank bill rate is unchanged at 5.59%. The Australian 10 year bond yield is now at 3.47% and up 1 bp from the weekend. The China 10 year bond rate is down 1 bp at 2.84%. And the NZ Government 10 year bond rate is now at 4.18%, and that is up 2 bps from the weekend. The UST 10 year yield is at at 3.56% and down 1 bp.

LISTLESS EQUITIES MIXED
The S&P500 went into the weekend with a modest 0.1% gain. Tokyo has opened the week up 0.3% but Hong Kong has started its week down -0.5% and Shanghai is down another 0.2%. The ASX200 is just up a touch in afternoon trade and the NZX50 is showing a 0.3% gain late in its session.

GOLD SITTING UNEASILY BELOW US$2000
In early Asian trade, gold is down slightly, having fallen with a bump in the weekend. It was down around US$3.50 on Monday to US$1980/oz.

NZD STILL DRIFTING LOWER
The Kiwi dollar has dropped a little more, from US61.4c at the weekend to US61.3c a short time ago. Against the Aussie we are not much changed at A91.8c. And against the euro we are slightly lower than over the weekend at 55.8 euro cents. The TWI-5 is at 68.6, which is down 50 bps from the weekend.

BITCOIN TRYING TO RALLY
The bitcoin price has been having an up-and-down Monday as the cryptocurrency looks to rally from losses in the past seven days, during which it has dipped back under US$30,000. At time of writing Bitcoin was up 0.6% in the past 24 hours at US$27,760, having come close at one point to climbing back over $28,000.

ANZAC DAY
Readers outside New Zealand should know that ANZAC Day is on Tuesday, April 25, a full public holiday. 

This soil moisture chart is animated here.

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