What happened Friday

Economy / news

A review of things you need to know before you sign off on Friday; housing lending lackluster but repricing risk grows, funds flood back to TDs, consumer sentiment surprise, swaps up, NZD firm, & more

29th Sep 23, 3:59pm by David Chaston

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/LOAN RATE CHANGES
No changes to report today.

TERM DEPOSIT/SAVINGS RATE CHANGES
TSB (A-) raised all its 2-5 year TD rates, now offering rates at the upper end compared with its bank rivals. Liberty Financial (BBB-) raised its rate offers across the board, with their one year offer at 6.90%.

LACKLUSTER ...
Housing lending mortgage books rose by +$968 mln (+0.3%) in August, which was its second largest monthly increase in 2023. But the annual growth rate remained unchanged at +3.0% from a year ago, its lowest year-on-year expansion since October 2012. Neither lending for business, nor lending to the rural economy are out of the growth doldrums. If any sector is attracting more lending, it is the horticulture sector.

... BUT FACING REPRICING RISK
Almost a quarter (24%) of all owner-occupier mortgages ($61.6 bln) will reprice in the next 3 months, but $26.2 bln of that is already on floating rates. $92.5 bln (36.1%) will reprice within 180 days. $160.2 bln (62.6%) will reprice within a year. That is a lot of pain to yet flow through to household budgets. For investors, it is an even higher proportion.

HOUSEHOLDS FLOOD BACK TO TDs
Total deposits in the banking system hit $440 bln for the first time in August 2023, up +2.7% from a year ago. $235.9 bln of these were household deposits which were up +5.4% in a year. Of these, $120.5 bln were term deposits (also a new record high) which were up a remarkable +25.0% or +$24.1 bln in one year. -$9.2 bln of that came out of household transaction accounts, -$2.9 bln came out of household savings accounts.

STILL NEGATIVE, BUT ...
The latest ANZ-Roy Morgan survey of consumer sentiment doesn't find much spring in the step of households but it does find some, and in the most surprising places.

STILL RETREATING
Sales of farms and lifestyle blocks continue to slide according to REINZ August data.

MORE ELECTION POLICY RELEASED
There were policy releases by political parties today. National released its Forestry policy and their Police policy. Labour released more Health policies. And NZ First also released Law & Order, and Mental Health policies. You can find them all, compared, here.

MANAGING LIQUIDITY RISKS
Managing liquidity risk is on the mind of regulator, the FMA. It is especially timely at present when yields are rising, depressing asset values. Investor harm occurs when there are significant fund redemption requests. Poor liquidity risk management in those circumstances could force an investment manager to sell less liquid assets, like some types of property investment, for whatever price they can get, which impacts the return of all fund investors. Or, the manager may have to sell a lot of more liquid assets – like large companies – which suits the withdrawing investors but raises the risk of the fund, making it unfair to the remaining investors. Effective liquidity risk management will also reduce the risk of a liquidity crisis in one fund spreading to other managed funds. The FMA has issued proposed guidance on how fund managers should behave with fund structuring.

RISING FASTER
In Japan, August retail sales rose +7% from a year earlier, unchanged from an upwardly revised July result. This August increase was much higher than the consensus forecast for +6.6% growth and was the fastest pace since February. Consumption continues to recover solidly after the pandemic-induced retreat. Japan has CPI inflation at 3.2%.

DAYLIGHT SAVING TO START IN PARTS OF AUSTRALIA
NSW and Victoria, South Australia, Tasmania and the ACT will start summer time this weekend and we will revert to being two hours ahead of them again. Northern Territory, Queensland and Western Australia do not observe daylight saving.

ONLY THE CCP COULD DO THIS !
China's Mid-Autumn Festival has started and they will be on holiday from today until the end of next week. This year, the National Day holiday spans from September 29 to October 6, overlapping with the Mid-Autumn Festival. To partially offset the seven consecutive days of the National Day holiday, Saturday, October 7 and Sunday, October 8, have been designated as official workdays, resulting in a 7-day working week. But Hong Kong will only be closed for National Day, on Monday, October 2, 2023.

SWAPS FIRM
Wholesale swap rates are probably moving up again today. But the real reaction will come at the close. Our chart will record the final positions. The 90 day bank bill rate is also up +1 bp at 5.74% and now +24 bps above the OCR. The Australian 10 year bond yield is up +4 bps from yesterday to 4.51%. The China 10 year bond rate is down -2 bps at 2.71%. The NZ Government 10 year bond rate is down -1 bp to 5.33%, but still well above the earlier RBNZ fixing of 5.26% which was unchanged today. The UST 10 year yield slipped -1 bp today to 4.60% but holding most of this week's gain. Recall it started the week at 4.44%. The UST 2yr has fallen back -7 bps however, now at 5.07%.

EQUITIES MIXED & NERVOUS
The NZX50 is up +0.7% near the close today and if that holds it will be down 'only' -1.1% for the week. The ASX200 is up +0.2% in early afternoon trade and if that holds, that will also be the weekly change. However, Hong Kong has opened up +1.1% to start its Friday trade and if that holds it will limit its weekly loss to -2.1%. Shanghai is on holiday this week and will be closed all next week. Tokyo is down -0.1% to start its Friday trade, heading for a -2.1% weekly loss if that holds. The S&P500 ended its Thursday trade up +0.6% in the end. But so far this week it is down -1.0%.

GOLD DOWN AGAIN
In early Asian trade, gold is now at US$1866/oz and down another -US$7 from this time yesterday. Earlier, it closed at US$18764oz in New York. Earlier still it closed in London at US$1874/oz.

NZD UP
The Kiwi dollar is +½c higher than this time yesterday, now at 59.8 USc. Against the Aussie we are down -¼c to 92.9 AUc. Against the euro we are little-changed at 56.5 euro cents. That means the TWI-5 is now at 69.8 and up +40 bps.

BITCOIN FIRMER AGAIN
The bitcoin price is much firmer today, now at US$27,070 and up +2.4% from this time yesterday. Volatility over the past 24 hours has been modest at just over +/- 1.8%.

Daily exchange rates

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Source: RBNZ

Source: CoinDesk

Daily swap rates

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Source: NZFMA

This soil moisture chart is animated here.

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104 Comments

by Retired-Poppy | 29th Sep 23, 4:07pm 1695956838

"Households flood back to TD's"

This was a given. $235Billion good reasons.

by Nifty1 | 29th Sep 23, 4:19pm 1695957543

Good news for inflation, boomers locking their cash away... they've been spending heavy.

by Retired-Poppy | 29th Sep 23, 4:35pm 1695958527

Whatever works. Interest rates for borrowers have to come down! Is it only Boomers that have cash Nifty1? Sounds like you're a little Boomer averse!

by Nifty1 | 29th Sep 23, 4:51pm 1695959516

No but it's mainly boomers who are too risk adverse to do anything other than TDs...

by Officebound | 29th Sep 23, 4:59pm 1695959998

Any data, or just reckons?

by Pa1nter | 29th Sep 23, 6:03pm 1695963803

Practical realities of aging

- if you're older, you're going to be more risk adverse

- if you're older, you normally want shorter access to your funds

This does represent an issue ahead, with a diminishing pool of investment funds for more forward thinking investment, or things with much longer payback timeframes.

by HouseMouse | 29th Sep 23, 5:07pm 1695960458

I call bollocks on the notion that TD’s are a poor investment. Sure they are hardly keeping up with inflation, but it’s a pretty decent defensive strategy right now.

What’s better?

by Harvey W | 29th Sep 23, 6:02pm 1695963724

Housing, Mouse, Housing🙂

by WellingtonInvestor | 29th Sep 23, 10:09pm 1695978561

Major costs and hassles with housing and dealing with renters. You can leave it empty without penalty but still maintenance needed

by Rampart | 29th Sep 23, 6:50pm 1695966614

Exactly. Stress free investing. I’m currently getting $300 a week post tax. That’s the groceries sorted for the week.

by sparrow | 29th Sep 23, 5:14pm 1695960867

Term deposits are very appropriate for people who are going to want to use their money in the next few years.

by kiwikidsnz | 29th Sep 23, 6:34pm 1695965690

"There are old pilots and bold pilots but there are no old bold pilots"

by Pa1nter | 29th Sep 23, 6:43pm 1695966196

Harrison Ford

by kiwikidsnz | 29th Sep 23, 6:57pm 1695967052

I think a WW2 anonymous, I came across it in the 1960s

Edit: Google says a US airmail pilot in 1949 https://postalmuseum.si.edu/exhibition/fad-to-fundamental-airmail-in-am…

by Foxglove. | 29th Sep 23, 8:46pm 1695973612

My father was a RNZAF pilot from around 1933 (TAF) to 1954. He said once to me that during the war, particularly those in combat who didn’t drink (alcohol) were usually the first to go. Hard to imagine that from today’s perspective I would suggest.

by Foxglove. | 29th Sep 23, 6:19pm 1695964779

Except for owning multiple properties according to some.

by Dgm | 29th Sep 23, 7:29pm 1695968991

Clearly overseas investors see nz as too risky and hence banks are still pushing up TD rates to attract local money...

Cost of borrowing still continuing to rise

by DTRH | 29th Sep 23, 4:23pm 1695957827

Refinancing the clock is ticking billions going from 3% to 7% interest so your million dollar rental in Auckland rather than 30k interest now 70k at best, maybe you might be renting out for 40k a year take out monthly expenses investors will be in deep hole.A huge amount will be flooding the market soon

by Justa comment | 29th Sep 23, 4:45pm 1695959145

Yes the mortage repricing is about to accelerate, a lot repricing in the next 6 months, with nowhere to hide.

by Nifty1 | 29th Sep 23, 4:49pm 1695959353

We keep hearing this but it's not happening... how many $b of mortgages rolled over this year? House prices are starting rise again according to HPI...

by Retired-Poppy | 29th Sep 23, 5:09pm 1695960570

Why do you keep missing out the word "sustainable" when commenting on rises? A suckers market, dead cat bounce is more than likely what we are witnessing, a safe entry for FHB's is something a ways off yet. It's disturbing to see an increase in FHB low equity lending. This only puts on full display house prices are still in bubble territory and another downward shift will wipe out their equity too.

by Nifty1 | 29th Sep 23, 5:45pm 1695962756

RP it's just facts as to what's happening out there over the last 3 months, don't ignore it just because it doesn't suit your narrative. Yeah there's more low equity loans out there - the govt, rbnz & banks are all contributing to make this happen...

by HouseMouse | 29th Sep 23, 5:41pm 1695962479

An article a few days ago suggested quite a few recent immigrants were buying homes with the government’s’First Home’ scheme. This allows people to buy a house with a 5% deposit. However they still need to meet the bank / lender’s criteria. Link to the scheme further below.

Assuming a 5% deposit, that will still typically be a massive mortgage, stress tested at over 9.5% (low equity)

What do people think? Potentially dodgy lenders not stress testing? Even a 7.5.% interest rate on a 600-700k mortgage is a lot of money.

https://kaingaora.govt.nz/home-ownership/first-home-loan/

by Nifty1 | 29th Sep 23, 5:48pm 1695962882

You can buy with family - multiple incomes... the income cap is fairly high. People make it work.

by HouseMouse | 29th Sep 23, 6:16pm 1695964577

A combined income of no more than 150k doesn’t go that far on a 650-700k mortgage at 7.5% plus, stress tested at 9.5% plus.

A 700k mortgage at 7.5% over 30 years is over $1200 pw….

by Nifty1 | 29th Sep 23, 6:24pm 1695965046

Use some bank calculators and you'll get an idea of borrowing capacity... which bank stress tests 9.5%+?

KO has been doing up to 25% deposit or $200k.

by HouseMouse | 29th Sep 23, 6:24pm 1695965089

That’s the shared equity scheme isn’t it

by HouseMouse | 29th Sep 23, 6:31pm 1695965463

All Banks will stress test at least 9.5% on low equity (5% deposit). More than 9% is standard even on higher equity (>20% deposit)

by Nifty1 | 29th Sep 23, 6:40pm 1695966003

Where are you getting that from?

by HouseMouse | 29th Sep 23, 6:43pm 1695966200

It’s pretty common knowledge. Why don’t you think so? Stress test rates are usually *at least* 2% higher than actual current rates. And there’s almost always a low deposit ‘penalty’

by Nifty1 | 29th Sep 23, 7:17pm 1695968245

You're making it up, current test rates aren't really common knowledge... is it advertised on their websites? I don't think I've ever seen banks publicise different test rates depending on LVR...

Accussing banks of not stress testing is rediculous also...

Start talking facts HM, terrible anti spruiking.

by HouseMouse | 29th Sep 23, 7:07pm 1695967627

Ok. There’s such a thing as ‘industry chatter’, right? And my day to day work links to the development sector, which links to bank finance. Also, I didn’t ‘access’ (accuse?) banks of not stress testing. I was alluding to non-bank lenders, as my comment mentioned banks and other lenders.

Anyway, beer o’clock…

by blobbles | 29th Sep 23, 7:37pm 1695969473

I worked for 2 banks, their test rates were roughly 2% above current floating as the first pass look. HouseMouse isn't far off in my experience...

No, they don't advertise it, but they all know within the industry what each others rates are because they all have spies in each others organisations.

by HouseMouse | 29th Sep 23, 7:44pm 1695969881

Lol

Nifty talking out of his pro-property backside, as usual

Very poorly informed commenter

by Nifty1 | 29th Sep 23, 8:35pm 1695972930

Is HM a bank spy then? Lol. He's making statements like it's fact when it ain't. Banks have a range of a ways to assess an application and test rates ain't just it.

The fact of the matter is more people are getting low equity loans... he can't seem to comprehend that.

by Kiwi Tim | 29th Sep 23, 7:49pm 1695970149

Well know he's not, all major banks are testing from 9.1% to 9.3% as of today. Why would you even disagree so strongly with this when you are clearly quite clueless?

by IT GUY | 29th Sep 23, 7:54pm 1695970442

Because Niffty/HW2 are clueless ?

by Nifty1 | 29th Sep 23, 7:54pm 1695970475

Please provide a link that displays banks current test rates, HM also said 9.5%+

by Nifty1 | 29th Sep 23, 9:10pm 1695975027

A recent article to show you you're wrong HM & Kiwi Tim, clearly all banks aren't doing 9.5%+ tests rates as you stated...

https://i.stuff.co.nz/business/132542085/banks-checking-loan-affordabil…

All the big banks have set their current test rates at 8.75%, mortgage advisers say, except Westpac, which has set its at 9.5%.

There is never any mention of different test rates for different LVRs either... again, I think you'll find test rates aren't the be all for a home loan application...

by NZGecko | 29th Sep 23, 11:07pm 1695982045

It's a disaster setup in the making! Buying at valuations/DTIs higher than before the GFC !!

Who in their right mind would buy a crappy, likely to flood newbuild in a no section, newbuild, on a West Auckland hillside (I live on a full section one) or a flat South Auckland flood plain??

The next fools or REA/Bank useful idiots - who will be winging in 6 months in the Granny Herald, how their NZ Dream turned sour. Now they saddled with 700k borrowings, asking the Gumit to bail them out (that is us!)

by HouseMouse | 29th Sep 23, 6:52pm 1695966743

Agree. It’s another cluster f#%^ in the making. Wait for more Granny Herald sob stories in the near future.

by HouseMouse | 29th Sep 23, 6:54pm 1695966860

And that’s the thing, right. We will be bailing them out.

by IT GUY | 29th Sep 23, 7:52pm 1695970337

There is not enough cash to get rid of the Hawkes Bay silt let along buy out properties, hence Labour are pretending there is no problem, its a disaster.... I think Robinson is happy he won't have to solve this.....

by RickStrauss | 30th Sep 23, 7:37am 1696012641

Quite amazing that taxpayers are already bailing out properties that got flooded. At the same time that Luxon is ranting about handouts for poor people we're continuing our generous welfarism for property. Like folk think welfare is for preserving wealth not helping the poor.

by DTRH | 29th Sep 23, 5:27pm 1695961637

FHB house’s were 21k down in two months huge drop,the emergency rates period was around 2 years ago so most people took 2 or 3 fixed term so over next year the avalanche will happen, some who could see the bubble bursting fixed for five years I would imagine they will be sweating now as it’s going to be rates higher for longer add on inflation way over 2% target, the house price’s will start tumbling very quickly over next year adding pace to the already 20% crash.

by Nifty1 | 29th Sep 23, 5:42pm 1695962552

FHB house’s were 21k down in two months

Where are you getting that from?

by Retired-Poppy | 29th Sep 23, 5:49pm 1695962985

by Nifty1 | 29th Sep 23, 4:49pm - "We keep hearing this but it's not happening"

Nifty, you clearly have not read the article above regards mortgage repricing risk still ahead. With a very much a delayed effect, the real downturn that will effect employment and asset prices is still in front of us.

by Nifty1 | 29th Sep 23, 5:51pm 1695963066

HPI was your best source over the last year/s and now your ignoring it when it's not showing what you want...

by Retired-Poppy | 29th Sep 23, 6:08pm 1695964086

Where on earth do you get the idea I am ignoring the HPI especially when I'm using the terms "dead cat bounce" and "suckers market" to describe it? Again, try using the word "sustainable". That word is something you're struggling with - LOL!

S U S T A I N A B L E

by Nifty1 | 29th Sep 23, 6:26pm 1695965202

Go take a nap RP, it might help you be more sustainable.

by IT GUY | 29th Sep 23, 6:39pm 1695965946

welcome back HW2

by Nifty1 | 29th Sep 23, 7:14pm 1695968098

Oh dear, you're still obsessing over HW...

by IT GUY | 29th Sep 23, 7:32pm 1695969120

Its not an obsession, its based on the timing of your posts and HW2's posts, I really do not believe that a statistical analysis of the clustering of your posts will show you in good light, I can run one if you want but it will be damning..... I am sure that Interest log IP addresses as well, and who likes who's posts.... but lets just consider the time based clustering....

facts not opinions HW2

by Nifty1 | 29th Sep 23, 7:35pm 1695969352

Lol mate you've gone on this rant before...lost the plot.

by HouseMouse | 29th Sep 23, 7:47pm 1695970043

It’s you who has lost the plot tonight, I am afraid, with a slew of ill informed opinions

by Nifty1 | 29th Sep 23, 9:04pm 1695974681

Please show me how I've been wrong... I've shown you how you have.

by Eschaton | 29th Sep 23, 4:45pm 1695959101

How much super did we pay to rich people this week?

by Justa comment | 29th Sep 23, 4:48pm 1695959302

Im with you on this. NZ Super should be stopped for those still working and earning over 70k, and for net worth over 3 million. In 10 years time we will be forced to look at this.

by Nifty1 | 29th Sep 23, 4:50pm 1695959440

If we start calling them beneficiaries and make them jump through the hopes the others go through, maybe less will take it...?

by nz-it-worker | 29th Sep 23, 5:04pm 1695960246

The hip operation costs would be astronomical.

by Hamish | 29th Sep 23, 5:17pm 1695961069

Traffic light system.

by EdwardD | 29th Sep 23, 5:37pm 1695962225

I'm retired and agree with you on this (no one with a net worth of 3m should receive Super).

I like the fact that ACT are brave enough to say they want the retirement age moved to 67 - all parties should get behind this.

Super should ONLY be available to NZ residents who have paid NZ tax for 20 years.

(Edit - I should say that I have never applied for NZ Super)

by malamah | 29th Sep 23, 6:35pm 1695965729

Super should be available at 65. Those extra two forced years are simply for the benefit of those who don’t need it.

by Rampart | 29th Sep 23, 6:54pm 1695966874

I’m a long way from retirement age but I believe it should be means tested

by IT GUY | 29th Sep 23, 7:13pm 1695967988

What is the means by which it should be tested, Race? IQ? assets? or Income? its a difficult proposition from universal access to hard stop with no vote, smells like co-governance but effects all races. what about those who have their assets in a trust?

by Nzdan | 30th Sep 23, 7:22am 1696011771

Income.

by singautim | 29th Sep 23, 8:15pm 1695971757

I agree with everything except you not applying for NZ Super. Always apply for every benefit - you can then choose to give it to charity if you wish.

by Averageman | 29th Sep 23, 6:04pm 1695963879

Plenty of retired with houses worth over $3m thT they payed way less for. Aka high equity and no income. So they should be forced to starve, or sell and move...?

by Officebound | 29th Sep 23, 6:27pm 1695965242

Sell and move makes more sense than having people in $3m homes on a benefit.

by singautim | 29th Sep 23, 8:13pm 1695971593

I'm earning under 70k and net worth about 2 million. But if your system was in place and I approached your necessarily arbitrary boundaries I'd transfer property and wealth to my wife (intending doing that anyway) and children (I can trust them). It is just too easy to fiddle (for example send wealth overseas). If you want to save money on Super then change the age from 65; pay less (NZ Super is higher than UK pension) and insist on more years living in NZ - I get full super but arrived aged 54.

Note if you earn over $70 your Super is taxed at a higher rate.

Means testing Super is a recipe for happy accountants and lawyers and civil servants.

by IT GUY | 29th Sep 23, 8:24pm 1695972252

many get nothing but you have to be very careful, some little old ladies live in expensive old houses they got with there partner in the 50's etc..... they are not dirty speculators, just living....

by kiwikidsnz | 29th Sep 23, 5:18pm 1695961093

Only what they're entitled to.

by nzphoenix | 29th Sep 23, 5:38pm 1695962313

Yeah I agree. The superannuates are the most entitled generation. Destined to pull the ladder up behind them once they bleed future generations completely dry.

by James Thrace | 29th Sep 23, 6:08pm 1695964094

For the tax year ended march 2023, 4328 people earning over $250k per year were paid national super.

at the rate of $21,250 per person (couple rate) that is $100 million a year, or, 1000 nurses.

Drop that income level to $180k, NZ paid half a billion in super.

Clearly, someone over 65 earning $180k is not hard up.

income test national super. That half billion would plug everyone’s fiscal holes.

there is no need to increase the super age. Just income test the bloody thing. All other beneficiaries are income tested. Why are the Wealthy elderly exempt? Super is paid for on current tax receipts, so the old “Ive paid taxes all my life” sophistry is just weak sauce as an argument.

by kiwikidsnz | 29th Sep 23, 6:21pm 1695964878

We paid for our parents pensions as they paid for our grandparents. Hopefully you're raising your kids to feel the same way about you.

by malamah | 29th Sep 23, 6:41pm 1695966098

Moot.

The burden today is far greater than at any point in NZ history. And quite frankly I do not want my kids paying through the nose so I can retire in a $3m home on a more than adequate income. If you can’t afford to eat but have a second home worth millions, sell.

We’re not supporting them at this point, we’re preserving their “wealth”, and that’s wrong.

There are many elderly who need the support, and I support that. But far too many don’t.

by powerdownkiwi | 29th Sep 23, 7:10pm 1695967819

kknz - ah, no, you didn't.

Nobody has ever 'paid' at the rate the pension-expectation has accrued. Same with many things. They all relied on growth to inflate the demand away, even as the demand increased exponentially. Worked until it didn't.

by blobbles | 29th Sep 23, 7:48pm 1695970084

You lived through an era where energy was virtually limitless and free, barring the oil shocks. Then benefited from gross irresponsibility of people who acted to extend and pretend that limitless energy growth could continue forever via stupid monetarist policies, acting to protect you from any pain, while creating extreme pain for those coming after you.

The future can't pay those commitments any longer as the chickens come home to roost.

I know some boomers now with a huge lifestyle block, something like 8 vehicles including a massive camping vehicle. 2 people who travel extensively on overseas holidays, burn enormous amounts of fossil fuels to support their lifestyle. One was a stay at home mum, the other an engineer, both had good super plans and bought properties where they could sit back and enjoy endless capital gain. They still have huge incomes and both collect super dilligently.

Sure they played the game well and benefited from it, but its sickening when their children can barely afford their 30 year mortgages and their grandchildren are living in abject poverty. What they experienced can simply never be repeated again unless some magic free energy technology comes out in the very near future.

by Albert2020 | 29th Sep 23, 8:59pm 1695974349

Your taxes don’t touch the sides of your super entitlement. Like Aussie, if you are fortunate enough to not need super then you don’t get it.

by Justa comment | 29th Sep 23, 8:02pm 1695970967

Those 4328 people should be ashamed, there is a simple process to opt out of the pension. Over 250k still working past 65 and drawing a pension, a disgrace.

by singautim | 29th Sep 23, 8:22pm 1695972130

NZ citizens have universal benefits for Super, Education, Health. Works well with minimal admin costs and virtually no rorting.

Super is liable for income tax so partly means tested.

by rolande | 29th Sep 23, 9:09pm 1695974958

No. Student allowances means tested strictly.

Health allowances are needs and means tested.

by James Thrace | 29th Sep 23, 9:59pm 1695977987

No. Student allowances are income tested against either your parents income or your partners income. For students over 25, its just partner income. Many students tick the box saying they’re single so they get the full allowance on the basis that they have to pay it back regardless so where is the harm.

by singautim | 29th Sep 23, 11:26pm 1695983214

The student allowances are trivial compared to free education from 5 to 18 an then 75% of tertiary costs paid by the state.

Nobody at the hospital asked about my wealth or income when I arrived with a heart attack.

by KH | 30th Sep 23, 9:06am 1696018016

Ditch super entirely and bring in universal KiwiSaver. Implement over say 30 years.

That's a medium term plan, which is not the kiwi way, but needs to happen

by donny11 | 29th Sep 23, 5:17pm 1695961029

NZ 10 year at 5.32%. Ouch.

by Squishy | 29th Sep 23, 5:33pm 1695962020

Higher than Greece (4.5%) or Italy (4.8%.) Partly that reflects New Zealand's very high inflation rate but it's also that government has not adjusted spending so demand has been exceptional.

by Justa comment | 29th Sep 23, 7:59pm 1695970763

Yes I see the foreign exchange markets moves today are firmly picking another OCR rise now. Edging to US 60, AU 93 UK 48 again.

by J.C. | 29th Sep 23, 5:27pm 1695961651

Check out this start-up from ASB's parent company CBA. This is nuts. If this is not subprime or near-abouts, I don't know what is.

A start-up funded by the Commonwealth Bank has quietly begun loaning customers their home deposits, allowing more Australians the chance to get on the property ladder.

OwnHome effectively offers a second mortgage to cover the cost of the deposit, charging a higher interest rate that borrowers pay off at the same time as their primary loan.

It removes the need for the lenders mortgage insurance that people with less than a 20 per cent deposit typically have to pay as part of a play to upend the housing market.

https://www.afr.com/technology/the-cba-backed-start-up-that-wants-to-pa…

by bobestm | 29th Sep 23, 5:40pm 1695962457

Crikey .. quite a shocker

by HouseMouse | 29th Sep 23, 5:42pm 1695962579

Fair dinkum

by kiwikidsnz | 29th Sep 23, 5:51pm 1695963085

Back in the "good old days" (30+ years or so ago), solicitor or vendor finance of the deposit was an occasional option, especially when a property was slow to sell. We bought a couple of properties that way (12%pa interest IIRC).

Perhaps bank / disclosure rules make these alternatives untenable nowadays ?

by Nzdan | 29th Sep 23, 5:56pm 1695963383

Ah yeah back when it was a first mortgage, second mortgage and vendor finance. The "good old days" of high returns savings accounts, low house price to income ratios etc, the generation of the day were too frivolous to save a deposit, so they rushed out and loaded themselves up on debt.

by kiwikidsnz | 29th Sep 23, 7:11pm 1695967886

"...the generation of the day were too frivolous to save a deposit, so they rushed out and loaded themselves up on debt."

Sounds familiar today.

In our case, these were investment properties & +vely geared. Therefore anyone could have bought them at the time.

by HouseMouse | 29th Sep 23, 6:27pm 1695965262

Tony Alexander is an enigma. Heard him on RNZ a couple of days ago and he was excellent. In the link below he is DGM on consumer activity, yet still sees an upside to housing. He seems to have real cognitive dissonance on housing, but provides quite good commentary at times on other things:

https://www.macrobusiness.com.au/2023/09/reserve-bank-grapples-with-dee…

by kiwikidsnz | 29th Sep 23, 6:33pm 1695965613

I used to subscribe to his paid weekly newsletter but changed to interest.co to get the valuable comments and feedback ;).

I still read his free weekly, I see comments here why people downvote him however I have usually found his opinions well supported by his research. And he has a plain English commentary.

by HouseMouse | 29th Sep 23, 6:46pm 1695966361

Some of his analysis is good but he’s been trash on housing the past 2-3 years. Influenced by his paymeisters?

by NZGecko | 29th Sep 23, 7:26pm 1695968782

I don't think TA knows that he is totally "see through" in his talks on real estate??

He is totally a paid stooge.

He constantly told people to buy property, even when the DTIs were at 12x plus in Auck. He made up plethora of reasons that the party was sure to go on, to the moon in fact.

Now that DTIs are down a little (still outrageous) he doubles down. The rooster has no shame. Paid and bought stooge.

by IT GUY | 29th Sep 23, 6:41pm 1695966072

His gold coast penthouse causes the dissonance, maybe it has a big mortgage

by kiwikidsnz | 29th Sep 23, 7:06pm 1695967608

He mentioned his subscription numbers once in the first year which I multiplied by the then $110? pa to equal several '00,000s.

Now $150pa & GC property has nearly doubled since (my GC relatives has). My recollection is that Tony bought it off the plans just before Covid ?

by J.C. | 29th Sep 23, 7:05pm 1695967545

The Bank of England in the process of figuring out ways to bailout insurance and pension funds without calling it a bailout.

“Urgent policy intervention was required to prevent a self-reinforcing downward price spiral in government bond prices causing unwarranted tightening of financing conditions and credit supply to households and businesses,” Hauser said.

But Hauser pointed out the interventions were indirect. The Bank of England could only provide liquidity to traditional banks, who could then lend it on, or hoover up distressed assets in an attempt to calm the market.

There is no facility which allows the central bank to funnel liquidity directly into firms like pension funds and insurance firms.

“It is unrealistic for the private sector to self-insure against the most severe system-wide liquidity shocks: in such cases, safeguarding financial stability requires an effective public backstop,” he said.

https://www.cityam.com/bank-of-england-seeks-more-ammunition-to-deal-wi…

by kiwikidsnz | 29th Sep 23, 7:09pm 1695967769

Last time I looked pre Covid, UK University pensions were underfunded around GBP 12Billion, will only have got a lot worse.

by J.C. | 29th Sep 23, 8:27pm 1695972474

Aussie bank stocks 17% overvalued according to the venerable Chris Joye using his proprietary “bank equity bond premium” model.

How far would Aussie bank stocks have to fall to normalise the bank equity bond premium back to its average level? The trailing P/E multiple would need to decline from 14.9 to 12.5 times and the 12-month forward P/E would have to fall from 13.8 to 11.5 times.

On this basis, Aussie bank equities are 16 per cent overvalued using actual earnings or 17 per cent rich applying one-year forward earnings expectations. In practice, normalisation of the bank equity bond premium back to its historic range could also be assisted by lower real bank bond yields.

https://www.afr.com/wealth/personal-finance/bank-stocks-17pc-overvalued…

by IT GUY | 29th Sep 23, 10:03pm 1695978226

will repost in AM https://www.nzherald.co.nz/nz/takapuna-milford-coastal-walk-family-clos…;