What happened Monday

A review of things you need to know before you go home on Monday; more TD rate cuts, ACC levies to stay unchanged, commodity prices soft, Shanghai equities on a tear; swaps unchanged, NZX firm, & more

6th Jul 20, 3:59pm by David Chaston

ID 22702269 © Daniaphoto | Dreamstime.com

Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
None to report today, yet.

TERM DEPOSIT RATE CHANGES
Kiwibank. HSBC and NZCU Auckland have all trimmed term deposit rates today.

UNCHANGED
ACC has committed to keeping its levies unchanged for the next two years.

COMMODITY PRICES STABLE
Commodity prices have slipped slightly in June from May, and are marginally lower in a year. Dairy prices are the main reason for the year-on-year shift. Aluminium prices are also lower. But there has been a good recovery in horticulture prices in June and meat prices have also held up well.

VICTORIAN RELAPSE
Although we are not regularly reporting updates for COVID-19 data in this review, the Australian situation is getting more serious by the day and will impact the New Zealand economy. The hard lockdown of residential high rises (the new cruise ships?) in Melbourne is an ominous development. Victoria's borders are now closed. They have reported another +127 cases so far today, almost all community transfer. Early reopenings and leaky lockdown rules have proven to be a major public health mistake. To move from Victoria to NSW you are about to need "a permit", a sort of internal passport-and-visa system.

NZBA FIGURES SHOW PAYMENTS ON $44.2 BLN OF CONSUMER LENDING REDUCED OR DEFERRED
Latest figures from the New Zealand Bankers' Association show take-up of the Business Finance Guarantee Scheme (BFGS), through which the Government guarantees up to 80% of loans, remains sluggish. As at June 30, NZBA says $121 million had been lent to 664 customers via the BFGS. Meanwhile on the consumer lending side, 79,166 customers had $24 billion of loan repayments reduced, and 59,885 customers had all their loan repayments deferred on $20.2 billion of lending.

LOOKING AHEAD
NZX dairy futures trading suggests that Wednesday's auction may result in a minor positive, at least for milk powders. WMP is anticipating a +1% rise on top of the prior +2.2% rise. SMP is anticipating flat trading.

EQUITY MARKET UPDATES
The S&P500 futures index is signalling that Wall Street will open up +0.6% on rumours of vaccine progress. Meanwhile, the NZX50 Capital Index is also up +0.5% in late trade here today. The ASX200 is basically unchanged in early afternoon trade. Shanghai has opened up very strongly, up almost +4.0%. Hong Kong is up +2.5% and Tokyo has opened up +1.4% to start the week.

SWAP RATES UPDATE
Swap rates are probably unchanged today. We don't have final wholesale swap rates movement details yet but we will update this later in the day if they show a significant movement. The 90-day bank bill rate is unchanged at 0.31%. The Aussie Govt 10yr is up +3 bps to 0.94%. The China Govt 10yr is up a very strong and surprising +8 bps to just on 3.00%. The NZ Govt 10yr yield is also higher, up +5 bps to 1.01%. The UST 10yr is up +2 bps at 0.69%.

NZ DOLLAR FIRMER AGAIN
The Kiwi dollar just keeps on rising, now at 65.5 USc. Against the Aussie we are also firmish at 94.2 AUc. Against the euro we are up at just over 58.1 euro cents. And that means the TWI-5 is now up over 70..3 and it hasn't been this high in the past five months.

BITCOIN STAYS LOWER
The price of Bitcoin is marginally firmer that where it opened this morning, now at US$9,117. The bitcoin price is charted in the currency set below.

This soil moisture chart is animated here.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

Daily exchange rates

Select chart tabs

Source: RBNZ

Source: CoinDesk

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93 Comments

by Rosenstein | 6th Jul 20, 4:13pm 1594008788

Who said the Kiwi can't fly? Imagine another outbreak, we could hit parity with the USD!

by urban_mermaid | 6th Jul 20, 4:15pm 1594008937

Yay for online shopping! But boo because in order to remain competitive Mr Orr is likely to lower the interest rate...

by Hook | 6th Jul 20, 5:38pm 1594013888

Lowering the interest rate (OCR) is unlikely. It won't do much for either the dollar or Bank rates. The NZ dollar rise is an anomaly that most professionals can't justify.. bit like the stock markets, but it's happening. All aboard the good ship FIIK

by JimboJones | 6th Jul 20, 6:42pm 1594017721

Can’t justify? I can’t justify that it isn’t higher! We currently have no community Covid, low govt debt, low unemployment, and robust spending. Not many countries can say that.

by northman46 | 6th Jul 20, 6:52pm 1594018359

I think if you look longer term against the USD, it's not that high right now at all. Can't deny that it hasn't had a great rally over the past 2 months or so. I could see it going a fair bit higher.

by Hook | 6th Jul 20, 7:09pm 1594019378

Dude!! are you in the same NZ as me?? Govt debt has skyrocketed, unemployment is tipped to double( at least), and the only one spending is the Govt ( see last re: debt)

by northman46 | 6th Jul 20, 7:24pm 1594020273

But that's the same as nearly every nation.

by JimboJones | 6th Jul 20, 8:00pm 1594022442

We had low government debt to start with, if it doubled or tripled or quadrupled it would still be low by world standards. Our unemployment rate is still low, possibly because of the stimulus our government can afford (for now at least). Most of our businesses are open except for tourism etc. people are out spending, I’m hearing that from almost everyone I talk to. It’s a lot better than most places at the moment.

by Rosenstein | 6th Jul 20, 8:48pm 1594025311

Roll on September

by Rhumline | 6th Jul 20, 9:14pm 1594026897

Hook, Jimbo... have a look at the rest of the world (the so called western one a least). We in NZ have benefited from going into this shemozzle with a low Crown debt base and, although we are moving to scarily high debt/GDP levels (about the same as the last National Government was pushing us towards without a pandemic) we look great compared to the trainwreck that is USA. And we still have tradeable commodities and a reasonably-intact domestic economy.

I'm happy even though my own business has suffered a more-than-50% cashflow hit. Happier that I've cashed out of high risk investments and consolidated.

Life is shit at the moment, but perspective is still a wonderful thing.

by Jarlaith | 7th Jul 20, 3:03am 1594047809

It’s not like NZ is the USA with a sovereign debt near 100% of GDP and a government completely detached from reality in the face of a world pandemic.

by dictator | 6th Jul 20, 4:32pm 1594009971

The kiwi has all the characteristics of a good reserve currency.

by Tradersam | 6th Jul 20, 5:04pm 1594011880

Shame the Government doesn’t have the gold reserves to back it.

by Masher | 6th Jul 20, 5:59pm 1594015163

We did, but it got sold off. Most of it at $26 per oz.

by Logicthinker | 6th Jul 20, 5:45pm 1594014332

Well the woman who skipped out the hotel was semi- aerial. Was she assisted by Bishop and Woodhouse through a back door but was picked up later by a police officer when she asked for directions to get to National Party Headquarters in Auckland Central.

by powerdownkiwi | 6th Jul 20, 5:08pm 1594012088

Thank you for voicing what is becoming obvious.

The question is not what National are stooping to, but who is applying what (funding?) pressure to them.

Mind you, H Clark isn't helping much either.....

by Ex Expat | 7th Jul 20, 6:51am 1594061510

These kind of comments make a joke of this site. I hope you are contributing dollars because I’m sure not until we get some professionalism here. Lefties. No surprises.

by RickStrauss | 7th Jul 20, 11:13am 1594077216

Your recent form makes this comment a little tricky too.

by Ex Expat | 7th Jul 20, 6:58am 1594061927

Reported.

by Nzdan | 7th Jul 20, 7:47am 1594064845

triggered

by Carlos67 | 7th Jul 20, 4:12am 1594051948

Another outbreak is not the problem its everything else and what happens when you wake up one day and it's no longer the worlds reserve currency and its declared worthless.

by Shamino | 6th Jul 20, 4:13pm 1594008819

Its interesting watching the NZD value of my gold and bitcoin. Bitcoin holding steady, Gold creeping up - but in USD. In NZD values both are slowly bleeding value due to the currency movements. The NZD / USD rate is probably more volatile that both right now.

by J.C. | 6th Jul 20, 6:22pm 1594016579

BTC / ETH / XRP just bounced.

by Masher | 6th Jul 20, 6:44pm 1594017878

Digibyte is your friend :-)

by Mrs The Point | 6th Jul 20, 9:33pm 1594027985

Gotta catch 'em all, Pokémon.

by King of the whiners | 6th Jul 20, 4:14pm 1594008850

Anyone remember the whiners of March/April complaining bitterly that the NZ lock down was unduly harsh compared to the Australian lock down 'which was getting the same result'? Where, oh where, have those angry voices gone now?

https://www.news.com.au/travel/travel-updates/health-safety/strong-chan…

by GV 27 | 6th Jul 20, 4:21pm 1594009273

Queensland, TAS, ACT, SA and NT all reported 0 cases for the past 24 hours...

by northman46 | 6th Jul 20, 4:32pm 1594009954

I guess you missed the "VICTORIAN RELAPSE" paragraph?

by Logicthinker | 6th Jul 20, 5:43pm 1594014208

Lets hope they all stay in their Aussie States.

by Lanthanide | 6th Jul 20, 4:51pm 1594011090

To be fair their current outbreak has come from lax quarantine procedures and processes.

We could easily have been in a similar position right now.

by middleman1 | 6th Jul 20, 5:17pm 1594012656

Sheer breathtakingly good luck. Over the weekend I learned from someone very close to the action the extent of our astonishingly good fortune to have avoided community transmission. NZ's quarantine management debacle is a tale of profound incompetence. We are in no position to be pointing the finger at the Victorian govt.

by oldbloke1 | 6th Jul 20, 5:27pm 1594013258

Ah, yes, the old anonymous "knowledgeable source". I would take more notice if this wasn't an anonymous source quoted by an anonymous poster - how to confirm the credibility of either of them?

by middleman1 | 6th Jul 20, 5:57pm 1594015034

Err, hotel, escapees, neglect to test first etc etc. Self evident it was a SNAFU where incompetents played fast and loose with our safety and futures. It's called the news which some people read and understand. The real background to which emerges privately over a few pinots. On tour, stays on tour. Believe it or not, I care not a jot.

by oldbloke1 | 6th Jul 20, 6:09pm 1594015790

I believe you doubtlessly share tall tales with your drinking buddies.

by middleman1 | 6th Jul 20, 6:54pm 1594018490

Didn't need a drinking buddy to tell me Clark was incompetent and saint Ashley cocked up. The only thing in doubt is the extent of risk they actually exposed us all to. The answer is very muchly but you are just gonna have to contain yourself until that detail comes out.

by General HubHub | 6th Jul 20, 8:28pm 1594024118

Soldier gets drunk and goes AWOL... “General, you need to resign!” Lol!

by Hook | 6th Jul 20, 5:48pm 1594014515

Who's at fault? The management for not checking on the "squaddies" or the "squaddies" for not exercising that very rare commodity called common sense. Even with the military overseeing things one slipped through. Won't be long and all internees will be wearing ankle bracelets. Although there is a very effective and quite cheap dog training device available which I'm sure would discourage fence jumpers.. it sure works with Fido.

by middleman1 | 6th Jul 20, 5:59pm 1594015144

Best squaddies in the world won't prevent poorly conceived process from tipping the show over.

by Hook | 6th Jul 20, 6:39pm 1594017571

True that MM, however "test at 3 days and 12 days" and no one leaves without a negative 12 day test I would have thought was pretty simple to understand and comply with. Having said that I'm not a quarantine expert, but to me it sounds pretty damn simple.

by middleman1 | 6th Jul 20, 6:58pm 1594018734

Yep, ABC. Childs play. Key evidence the process was flawed and failed accordingly ought to be obvious - ie it has been radically changed and now being enforced.

by Hook | 6th Jul 20, 7:15pm 1594019715

Haha yeah, refer my statement above re: training devices.. they are VERY effective.

by Camel's back | 6th Jul 20, 5:41pm 1594014091

Err.. Ball still in play... keep bringing in those substitutes.
Think you did mention previously quarantining by areas. So interesting real sub-divisions in Victoria.

by JimboJones | 6th Jul 20, 6:34pm 1594017271

It seems pretty obvious that they needed to go back into lockdown the minute there was community transmission. Delaying it will just extend the inevitable. Thought they might have learnt from the first time they had the virus.

by Kezza R | 6th Jul 20, 5:15pm 1594012514

There were a few of them and man they were very vocal. Then what if we get a more deadly strain hitting... lots of people keen to open up the gate, it would be the stupidest idea ever if they do.

by Foreign buyer | 6th Jul 20, 4:19pm 1594009172

Still some amazing bargains to be had on the property market too! What millennial wouldn't want to spend every hour working and living frugally for 30 years to spend a mere 500k on this gem? #Broken

https://www.trademe.co.nz/a/property/residential/sale/listing/269055357…

by brisket | 6th Jul 20, 4:33pm 1594009984

It's a two-beddie if you count the garage! In convenient Papatoetoe, only an hour from the CBD by public transport! With *several* windows! Why wouldn't I spend 10x my annual income on such a bargain?? After all, it will inevitably be worth twice that in 2027 -- it's physics!

by Kate | 6th Jul 20, 5:41pm 1594014060

"...so you can use this space as you wish." Not legally, you can't. You can convert a garage to habitable space (i.e., a place a person is going to sleep in) provided you get building consent. Unless they have that - it's not very good (possibly misleading) to be advertising it with a bed in it. Someone might think they can let it out as a bedroom; which they can't unless it is now deemed habitable.

by JimboJones | 6th Jul 20, 6:45pm 1594017910

I doubt they would get consent without at least replacing the garage door! Maybe add a window too.

by blobbles | 6th Jul 20, 5:01pm 1594011691

Utter madness.

by Becnz | 6th Jul 20, 5:56pm 1594014963

Madness to me means the market is now in fairyland and will soon be heading back to reality when buyers start to wake back up.

by bender | 6th Jul 20, 5:02pm 1594011767

Take a gander at Gislaine Maxwell's dig in New Hapshire - luxury on 156 acres amongst similar properties for 1.1 M US$. Compare to equivalent cost here. Ridiculous.

by Rosenstein | 6th Jul 20, 8:54pm 1594025651

Ah but in the US houses are where people live, in old NZ houses are tradable assets on the monopoly board

by Hook | 6th Jul 20, 5:57pm 1594015021

But it's got nice/multiple windows.. what an investment!!. Go west.. like waaay west would be my call. North or south west must have something.

by Masher | 6th Jul 20, 6:02pm 1594015336

It looks like a wing unit of a low security prison.

by Hook | 6th Jul 20, 6:10pm 1594015850

Haha yeah. but with less views

by Foyle | 6th Jul 20, 4:20pm 1594009223

"Bubonic plague in Mongolia". Don't worry, this happens ever few years, it's endemic there, carried by Marmots (groundhogs) that Mongolians love to eat. It's a regular occurrence and seldom spreads given modern medical knowledge and antibiotics.

by bw | 6th Jul 20, 4:55pm 1594011345

Closer to home. Flesh-Eating Disease. Must be something about Victoria at the moment...
https://www.theatlantic.com/health/archive/2020/07/flesh-eating-bacteri…

"It was just a little spot, but I felt there was something different about it,” he said. “What you’ve got—the infection is that big,” he sketched a circle around the wound, like the flanks of a small volcano. “But it’s going to get bigger.” He warned that the antibiotics had shut down his defences, and now the body would launch an attack on the infected tissue. The pus was building up under the skin, and it was about to blow. “Once it breaks through,” he said, “it will feel a lot better.” Buruli gets its name from a former county in Uganda.

by Hook | 6th Jul 20, 6:00pm 1594015225

Nah.. that's the NZ Green Party they're describing.

by middleman1 | 6th Jul 20, 7:12pm 1594019539

Except the 'going to get bigger' bit though. The greens ratcheting up the class warfare by proposing swingeing taxes on asset owners is an admission they think extinction is possible and as a survival response are trying to lock down their trotskyist core support. Leafy suburban airheads and affluently cushioned wellington bureaucrats ditched in a desperate struggle to avoid the looming 5% threshold plunge.

by Hook | 6th Jul 20, 7:20pm 1594020013

5% plunge?? Yeah, the sooner we go back to two major parties, no coalitions, no "tactical voting" BS the better.. IMHO

by General HubHub | 6th Jul 20, 8:35pm 1594024505

You mean your CCP and their “approved” opposition? No voting required!

by northman46 | 6th Jul 20, 4:35pm 1594010119

What's the rationale behind Shanghai's +4% equity gain today?

by Logicthinker | 6th Jul 20, 4:40pm 1594010426

Irrational Accounting

by Foreign buyer | 6th Jul 20, 5:26pm 1594013192

India has major border dispute with China last week. This week India's COVID-19 cases explode. China's stock markets are now very happy as their main new competitor is being badly damaged...... Coincidence?

by Hook | 6th Jul 20, 6:07pm 1594015631

Come on Fb.. even you aren't that myopic. The "major border dispute" was a few platoons (maybe Company's at most) getting into a slagging match and sorting it with some good old fashioned biffo.. Unfortunately the Indians got their butts kicked. Shanghai moved higher today on last weeks PMI and other data.. admittedly probably bogus

by General HubHub | 6th Jul 20, 8:40pm 1594024838

Bullshit... 20 Indian soldiers were slaughtered by your mates in the CCP. That’s not “biffo” that’s murder!

by Rosenstein | 6th Jul 20, 9:00pm 1594026020

Indian Lives Matter. You're onto something

by Foreign buyer | 6th Jul 20, 5:25pm 1594013153

Wage subsidy stops September the 1st. Good luck housing market !

by Hook | 6th Jul 20, 6:31pm 1594017112

Be careful what you wish for buddy, if the market drops significantly (> 10%) there will be a lot of FHBs caught with negative equity. The banks will reassess their exposure and probably require further lumpsum injections from said owners to rebalance. The FHBs who can't find the capital injection ( quite possibly a large %) may find themselves in a "distressed mortgagee" situation. The resultant damage to their credit rating may well last for some time and could seriously impact their future creditworthiness. NZs consumer debt is very high by western standards and a collapse in individual credit ratings will have significant effects to all.

by Foreign buyer | 6th Jul 20, 6:57pm 1594018639

It is a sad fact that lots of new FHB's have listened to the spruikers and bought a home during a bubble. They were warned repeatedly that this is a bubble and decided to buy anyway. They actually kept the market inflated, keeping lots of less fortunate potential FHB's out of the market. If the market now crashes, I believe that lots more less fortunate people will benefit and finally have a chance to own their own home.

by Hook | 6th Jul 20, 7:25pm 1594020328

Well that's a fair point Fb but.... who gets to decide who is "less fortunate", And what is the criteria for being "less fortunate" Remember if the housing market tanks badly then it won't do so in isolation.. there will be a domino effect.

by GV 27 | 6th Jul 20, 8:23pm 1594023782

Lots of FHBs also wanted to get on with their lives. Don't forget this correction is the business end of a market that only got a half-reset in 2007. Sitting on the sidelines for 13 years isn't really a realistic option.

by Rhumline | 6th Jul 20, 9:13pm 1594026815

Good point GV. Many of us who got caught in the 80's survived by the skin of our teeth... Getting into the market is hard, staying in the market is harder but (even for a single home owner) has always paid off in the longer term.

by Audaxes | 6th Jul 20, 5:27pm 1594013244

The China Govt 10yr is up a very strong and surprising +8 bps to just on 3.00%.
Opportunity outweighs liquidity and return of one's money.
Hence,
Shanghai has opened up very strongly, up almost +4.0%

by stuart786786 | 6th Jul 20, 5:58pm 1594015094

Now China going after its small neighbour Bhutan

https://m.hindustantimes.com/india-news/china-s-bhutan-move-aimed-at-in…

China has become a rouge state to be boycotted by world.

by Glitzy | 6th Jul 20, 6:07pm 1594015656

China is showing the first signs of becoming a failed state.

by Hook | 6th Jul 20, 6:12pm 1594015969

Really Glitzy?? on what measures pray tell

by Glitzy | 6th Jul 20, 7:09pm 1594019353

The move to dictatorship, increasing public spend on internal security, the imposition of laws purely to promote control of the pollution, the constant publication of factually inaccurate economic data, the provocation of the brain drain that we will see in HK, over spend on military assets etc etc etc. Its not hard to miss if you are looking for it.

Add to this pissing off pretty much everyone of its regional neighbours and internal politics purely designed to maintain power in the hands of a few and yourselves got the ingredients for a failed state because what comes next is economic collapse.

If we have 1.7mm people on wage support and we aren't the world's factory (which is idle) the implication is that China currently has about 350~400mm people Ue or underemployed.

Now you do the math on how much that costs.

by Hook | 6th Jul 20, 7:33pm 1594020781

Haha if you hadn't mentioned China by name I'd have thought you were talking about the US. Your assertion about the Chinese employment figures I'd have to query. No country can maintain a 4-5% GDP (externally calculated) with that level of idle workforce

by Glitzy | 6th Jul 20, 7:36pm 1594021017

Do you recall what they print on the side of tins of investment product ?

"Historic success is no guarantee of future performance".

And so it will be with the Great PRC ;)

by Rosenstein | 6th Jul 20, 9:01pm 1594026118

No that's Tesla.

by oldbloke1 | 6th Jul 20, 6:11pm 1594015898

The east is red, eh?

by Glitzy | 6th Jul 20, 7:23pm 1594020196

https://www.oneroof.co.nz/news/oneroof-and-reinz-support-kiwi-property-…

A nice bit of spruiky news being pumped through Oneroof c/o the real estate trade association REINZ.

Perhaps they could include the number of purchasers who have walked away from deposits in their stats and the number of built but empty apartments and houses on the fringes of Auckland.

Or better still release their actual raw data so that people can make an informed decision on their purchases.

Edit - I see Tony Alexander is pumping his speil one of the first articles on this 'news' platform, these guys just dont give up.

by bw | 6th Jul 20, 7:27pm 1594020431

And many people may not realise that the 10% deposit is not the only cost that may accrue from 'walking away' from a deal.
"If the developer suffers a loss on the re-sale of the property, it can claim damages for that loss"
https://www.thisismoney.co.uk/money/mortgageshome/article-8319005/Will-…
If the resale of the property is, say, 15% less than the contracted amount, then the 10% deposit is forfeit AND the vendor can and will come after the defaulter for the remaining 5%.

by Glitzy | 6th Jul 20, 7:20pm 1594020043

That assumes the buyer is resident as nobody can chase someone sitting in Shanghai with no onshore assets.

by bw | 6th Jul 20, 7:22pm 1594020141

Good point!
But many locals will not be aware of the additional possible penalty.

by Glitzy | 6th Jul 20, 7:38pm 1594021091

It's a good point to note. To be honest tho I'm pretty sure the presales on these large blocks were dominated by mainland buyers until they pretty much ground to a halt in mid 2017.

If you look at Barfoots actual sales data they only got a handful of sales in the Antipodean between Oct 2016 and the actual completion date last month. Pacifica is at a standstill (Chinese developer funded by Chinese bank for Chinese investors). Looks like that party is well and truly over.

by CN | 6th Jul 20, 11:20pm 1594034458

"I see Tony Alexander is pumping his speil one of the first articles on this 'news' platform, these guys just dont give up."

Let's follow the money trail with Tony Alexander (after leaving employment with BNZ) and find his vested financial self interests.

He describes himself as a professional speaker. He clearly states his target audience and there is potential for some bias there for his audience - "My audience has always been the average home buyer and property investor, plus small to medium-sized businesses." - https://www.linkedin.com/in/tony-alexander-145887193/

Here are some of his potential revenue sources:

i) subscribers to his newsletters - TView Premium - http://www.tonyalexander.nz/test.php
ii) his articles in OneRoof.co.nz, etc - unconfirmed - per click for his article contributions? / fixed monthly amount for a fixed number of contributions?
iii) property seminars, webinars - potential one off fee (unconfirmed) - "For enquiries about presentations, webinars, bespoke columns,email me at tony@tonyalexander.nz" http://www.tonyalexander.nz/

In terms of (ii) and (iii) above, those potential fee paying clients are more likely to want to hire a property perspective with a positive spin. Very few people (if any) are going to want to pay for an article or speaker with a negative spin on the property market. There is no disclosure of his potential conflict of interests here.

As the adage goes, "whose bread I eat, his song I sing" ...

CAVEAT EMPTOR ...

by CN | 7th Jul 20, 12:30am 1594038629

This is what a widely followed & high profile economist (previously employed by the BNZ), was saying in February 2020 (4 months ago) - no reservations or warnings whatsoever of any property price risks. Any owner occupier who acted on the economist's property price forecasts and purchased in January, February this year in Queenstown, on an 80% LVR mortgage could face the risk of being in negative equity (and a potential 100% or higher unrealised loss in their equity, which could become a realised loss if the purchaser is forced to sell due to closure of business, unemployment, etc).

Meanwhile, the "economist" just changes his forecast on 6 April 2020 for property prices to fall and goes on to tell his audience how he was "right". What happened to the collateral damage / road kill that the economist just left behind? - the purchaser's entire financial future may now be ruined, lives changed forever, future financial security of the family now in entire doubt, potentially leading to mental health issues ..] - this is the reason that I have continued to highlight the property price risk warnings to potential owner occupier buyers, so that they can make a fully informed purchase decision. (contrary to the property price bulls claims that the property price bear's motivation for speaking up is due to envy, or personal desire to purchase a property at a knock down price, or being "anti-property").

Hard working potential owner occupier buyers in New Zealand have been denied an honest discussion of property price risks that put their entire financial futures at risk (due to the huge vested financial self interests). These are real people, real lives that are potentially forever affected.

20 February 2020:
A reader asked for my comments regarding a report released last week by a research foundation set up by ex-Prime Minister Helen Clark looking at housing affordability. So, I had a quick look just in case it offered something with a realistic chance of being introduced to the effect that prospects for future house price gains would be reduced. It did not.
Do I think price growth will continue? Yes. Interest rate rises lie a long way down the track. Our population continues to get a 0.9% boost per annum from net migration flows. Wages growth has accelerated. Construction growth is strong but will be retarded by shortages of labour and also shortages soon of some materials because of factory shutdowns and supply chain disruptions associated with China’s latest virus.

by CN | 6th Jul 20, 7:50pm 1594021813

"Meanwhile on the consumer lending side, 79,166 customers had $24 billion of loan repayments reduced, and 59,885 customers had all their loan repayments deferred on $20.2 billion of lending."

Just to remind people that this is since March 26, 2020 to 30 June 2020.

The total of $44.2bn is 15.3% of total consumer lending book at the NZ banks.

Other observations:
i) Owner occupier borrowers on Interest only payment terms increased by 44% since February 2020 (i.e before COVID 19 lockdown)
ii) Non owner occupier borrowers on Interest only payment terms increased by 11% since February 2020 (i.e before COVID 19 lockdown)

https://www.rbnz.govt.nz/statistics/s32-banks-assets-loans-by-product

How much of this balance, and how many borrowers are going to be unable to meet their debt service payments when the mortgage deferral expiry period & the wage subsidies end? Then what will those property owners do? How will this impact the balance between effective demand and effective supply?

The above numbers exclude the small and medium business borrowers who may also have pledged real estate as collateral for business loans. Some of these small and medium business borrowers may be facing financial stress due to significant falls in revenues.

by Ahuhyeah | 6th Jul 20, 9:14pm 1594026867

Hoping that's not "tick tick tick... boom"

by Lanthanide | 6th Jul 20, 10:10pm 1594030205

I think people are making a bigger deal out of the amount of debt that's been deferred than is really warranted.

The banks normally offer repayment holidays and interest-free terms to people who are in good equity positions and payment histories, a lot of people will have these offers extended to them if needed once the initial period expires. Mortgagee sales are really the last recourse and no-one wants them. Furthermore Kiwisaver can be used to avoid mortgagee sales, and a lot of Kiwisaver balances are held with the same bank as the mortgage is - I'm not suggesting the trustees of the kiwisaver fund will bail the banking arm out, more that the banks would proactively look at tapping such balances where possible to stave off a mortgagee sale.

Better to look at the banks provisions for bad debts as a general gauge for where things are going, rather than these very gross figures and extrapolating doom from them.

by CN | 6th Jul 20, 11:18pm 1594034296

"Better to look at the banks provisions for bad debts as a general gauge for where things are going"

FYI, the provisions in the NZ banks cumulatively increased by 42% from Feb 2020 (i.e pre COVID19) to May 2020 (whilst total gross loans remained relatively unchanged).

https://www.rbnz.govt.nz/statistics/s10-banks-balance-sheet