Here are the key things you need to know before you leave work today (or if you already work from home, before you sign off for the weekend).
MORTGAGE RATE CHANGES
There have been no changes today.
TERM DEPOSIT/SAVINGS RATE CHANGES
BNZ increased its 'Rapid Save' rate 35 basis points to 4.30% from 3.95%. Westpac also added 10 basis points to its 90-day and six month term deposit and term PIE rates, lifting them to 4.10% and 5.30%, respectively.
CONSUMER CONFIDENCE STILL LOW
Consumer confidence lifted one point in April to the "still extremely low level" of 79.3, according to the ANZ-Roy Morgan NZ Consumer Confidence Survey. The proportion of people who believe it's a good time to buy a major household item, a key retail indicator, rose one point to -31. And inflation expectations eased a little to 5.2% from 5.4%.
HOUSING LENDING GROWTH RATE SLOWS
The Reserve Bank's latest monthly sector credit data shows the annual rate of housing lending growth slowed to 3.5% in March from 3.7% in February. The personal consumer lending growth rate increased, however, to 4.1% from 3.2%. The business lending growth rate fell to 4.9% from 5.7%, and the agriculture lending growth rate was slightly higher at 1.3% versus 1.2%. Total housing debt stood at $347.474 billion at the end of March, a month-on-month increase of $929 million. Consumer debt fell $69 million to $13.756 billion, business debt dropped $575 million to $132.076 billion, and agriculture debt was up $68 million to $62.323 billion.
OWNER-OCCUPIERS TAKE LION'S SHARE OF MORTGAGE BORROWING
The Reserve Bank also issued its March figures for new residential mortgage lending by borrower type. For March, the total was $6.036 billion, up 57% from $3.836 billion in February. The March total includes $1.245 billion for first home buyers, $3.637 billion for other owner-occupiers, $1.066 billion for investors, and $87 million for business purposes.
SFO GOES AFTER EX-INVESTMENT COMPANY DIRECTOR
The Serious Fraud Office (SFO) says it can now name a former executive alleged to have fraudulently obtained more than $2 million from the investment company he worked for after the Court lifted name suppression. The SFO has brought 51 charges of theft by a person in a special relationship and 51 charges of false accounting against Neil Barnes, who it says currently resides overseas. A warrant has been issued for Barnes’ arrest. Barnes was CEO of Nelson-based Investment Services Limited (ISL) and three associated property investment companies (ISL Group) between 2007 and 2018. Between 2011 and 2018, he is alleged to have made 51 payments from company bank accounts into his personal accounts and incorrectly recorded these in ISL’s ledgers, the SFO says.
DEADLINE FOR 'WOODY DEBRIS' INQUIRY PUSHED OUT
A 12-day extension for the Ministerial Inquiry into woody debris, including forestry slash, and sediment in Tairāwhiti/Gisborne and Wairoa, to May 12, has been approved. The three-member panel for the Ministerial Inquiry, chaired by Hekia Parata, sought the extension from the Inquiry’s two lead Ministers, David Parker and Peeni Henare, due to the number and substance of the submissions received. Parker says 313 submissions, "many of them fulsome and comprehensive," have been received.
BANK OF JAPAN AWAITED
The latest monetary policy update from the Bank of Japan is due Friday. New Governor Kazuo Ueda is expected to discuss conducting a comprehensive examination of the central bank's past monetary easing steps and revise its guidance on the future policy path, according to the Nikkei newspaper. Reuters reports Asian shares have surged ahead of the decision.
FEDERAL RESERVE CHAIRMAN PRANKED BY RUSSIANS
US Federal Reserve Chairman Jerome Powell has been pranked in a phone call by Russians posing as Ukrainian President Volodymyr Zelenskiy, Bloomberg reports. A video of the call, by supporters of Russian president Vladimir Putin, has reportedly been broadcast on Russian state TV.
WEATHER WARNING
MetService has issued a heavy rain watch and strong wind watch for Auckland this weekend. Auckland Emergency Management is "in monitoring mode." This is because MetService is tracking the potential impacts of a subtropical low expected to affect the upper North Island from the early hours of Sunday morning through to Monday.
NZ DOLLAR AT US61.55C
At the time of writing the New Zealand dollar's at US61.55 cents, up a little from US61.50c this morning. It's also at AU92.81c, 55.85 euro cents, and 82.34 yen.
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34 Comments
We haven't seen anything like these in a couple generations.
Both the yield curve's 3-month/10-year spread and the Fed's near term forward spread have nose-dived in April. The former by far at a record extreme (for modern USTs), the latter worst since the early 80s. You have to start from these in order to understand current data, the current situation, as well as what the official story will be about both.
Got notice of this development in my inbox today. Interesting to see that the developer is offering 2 year finance at 3.95%, and apparently is doing that by offsetting profit margin. I am sure it’s because they know full well that the houses have next to no chance selling based on a mortgage at well over 6%. I assume if the developer is providing the finance then it’s not stress tested at 8-9%.
And after 2 years, then what? My guess would be someone else is going to have to Stress Test the purchase to refinance the maturity. That, could be interesting, especially if we keep on the downward price trajectory, which is not improbable. Go back 2 years from today and point me to a lender that contemplated 20% price falls ahead back then.
Still a big risk.
In 2 years time if you can't refinance, for whatever reason, my guess is they just take the property back, and try to flick it on to another 'buyer'. What happens to the deposit paid in that case? Gone, most likely.
(NB: Selling is unlikely to be an option if the primary developer is still selling stuff against any secondary seller. The Developer can always undercut a secondary seller who has paid retail price)
You won't need to refinance, the finance will be through a lender, probable 2nd tier like Resimac, and the developer is paying some of the interest to subsidise your special rate (note the ad says "Effective rate"). when it rolls off the 2 yr promo you'll be on whatever their current rates are.
Pragmatist
I tend to be very apprehensive of any offer that seems too good.
As a second tier lender, they are likely to be renewing at a higher rate than the then current rates of the main banks.
As well as a higher than bank rate there is likely to be some locking-in conditions and/or costs. To avoid higher than bank rates, to transfer to another lender one at a minimum is likely need to consider the cost to discharge the existing mortgage and possibly a break fee (read the fine print to check that it isn’t a two year rate on a longer term), then an establishment fee with another lender, and of course all the associated legal cost and fees.
Before agreeing to anything - and certainly before signing anything - I would be taking legal advice and from a lawyer of my choosing and certainly not one recommended by them (No doubt there will be the comment which is a giant red flag:“Our recommended lawyer knows exactly how to arrange this”) Too many sharks out there - likely resurfacing after previously involved in time shares.
I suppose this developer is going all-in on the market picking up and rates coming down (looser test rates) in 2 years' time.
Only time will tell but there isn't much else to our economy and the RBNZ is well-aware of that. Orr will begin slashing rates at the first whiff, even the weakest one, of CPI dropping to around 2%.
What is the Biden administration’s international economic agenda?
National Security Advisor Jake Sullivan (@JakeSullivan46) kicks off a @BrookingsInst talk on the New Washington Consensus. Link
Remarks by National Security Advisor Jake Sullivan on Renewing American Economic Leadership at the Brookings Institution
We need the Aldi to reduce inflation!! The cheapest and the best (at least for pre cooked lasagne)
https://www.theguardian.com/food/2023/apr/28/australian-supermarket-las…
I’m surprised health insurance doesn’t include the knowns in your premium - such as your weight. It does include gender and age right?
Does anyone do a mixed life / health insurance? If you die early they win by not paying out on the health but paying out on the life and vice versa.
Wow that is a real eye opener. I love lasagna and am incredibly lucky to have homekill mince to use so I'd claim mine would be way better than store bought. But I could not get close to that price. that price is rediculous compared to NZ. 70c per 100g, that's probably less than our cheapest can of chickpeas.
"MetService has issued a heavy rain watch and strong wind watch for Auckland this weekend." I can confidently predict its not a cyclone or tropical storm and furthermore it's highly unlikely that there will be any cyclones or cyclone remnants that will hit NZ until Nov23.
Credit (lending) stimulus is now negative in real terms (RBNZ C5), and Govt fiscal stimulus for 2023 quarter one was also sharply negative (RBNZ D10). I hope the workers flooding into the country are bringing their own money with them. I really don't see how we will avoid a deep recession unless Govt starts spending a lot more than it is taxing.
Make no mistake there are Techtonic plates moving under the worlds normally stable FX Markets. Interest rates drive FX, not the other way around. A HUGE number of low rate debt driven equity investments could UNWIND real quick. With buyers well well well below current valuations.... be great buying. Add in the minimal breath in major indexes and things could go shaped like a pear.....
Has anyone had a look at the First Republic Bank's website? It looks likes something from last century.
Why anyone cares if they go under is beyond me!
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