A review of things you need to know before you go home on Thursday; even more retail rate cuts, home loan affordability improves, mortgage borrowing high, record low bond rates, NZD soft, & much, much more

A review of things you need to know before you go home on Thursday; even more retail rate cuts, home loan affordability improves, mortgage borrowing high, record low bond rates, NZD soft, & much, much more
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
First Mortgage Trust advised they have trimmed floating mortgage rates for both residential and commercial lending.

TERM DEPOSIT RATE CHANGES
Cooperative Bank, SBS Bank, Kookmin Bank, and Bank of China all cut TD rates today

AUCKLAND FHBs BETTER OFF
Falling interest rates have had a bigger impact on mortgage payments than they have on house prices, leaving first home buyers better off overall, particularly in Auckland. That's according to the August home loan affordability reports.

NO SLACKENING IN BORROWING FOR HOUSES
The RBNZ is reporting that new mortgage lending in August was $6.7 bln and its highest since November 2019 and the second highest since June 2016. In fact, excluding interest-only, which has faded recently, P+I lending is now at an all-time high. And it is all being fuelled by owner-occupiers and not investors. Just on 20% of all new lending is to first-home buyers and along with the prior two months is a record high. Just under 60% is new lending to existing home owners. And just over 20% is to investors (and that is a long way down from the 35% share investors took in 2015). More here.

LARGEST FINE EVER IN AUSTRALIA
Westpac Banking Group and Australian anti-money laundering regulator AUSTRAC agree for bank to pay A$1.3 bln penalty for 23 million contraventions of Australia's Anti-Money Laundering and Counter-Terrorism and Financing Act. Westpac had only provisioned A$900 mln for this failing.

TINY BY COMPARISON
As we have previously reported, Kiwibank has admitted its own banking system failures and agrees to pay customers $5.2 mln. It has entered into a settlement agreement with the Commerce Commission after reporting that it failed to have in place robust home loan variation disclosure policies, procedures and systems.

AND THERE IS MORE
The FMA has found weaknesses across its regulated sectors in four main areas: governance and oversight; conduct and culture; compliance assurance programs; and compliance and controls. It says while there has been a lot of improvement, there is still a long way to go. And it's signalling it "would take increasingly strong action where deficiencies are not remedied appropriately or in a timely manner".

NZ COMPANIES LINKED TO ALLEGED ISRAELI PAYMENTS TO AZERBAIJANI 'SLUSH FUND'
Israel Aerospace Industries, Israel's biggest aerospace and aviation manufacturer, transferred at least US$155 mln to NZ registered companies Jetfield Networks and Larkstone, which were used as a slush fund for Azerbaijan's kleptocratic elite, The Times of Israel reports. This information comes from suspicious activity reports filed by Deutsche Bank with the US Department of Treasury's Financial Crimes Enforcement Network. Interest.co.nz reported on Jetfield, Larkstone, their local company agent, and other NZ companies caught up in the so-called Azerbaijani Laundromat in 2017.

FLEXIGROUP TALKS UP HUMM'S NZ DEBUT
Flexigroup says its buy now pay later service humm, which replaced Oxipay in NZ this month, added 23 merchants in its first week. Additionally it approved some 1,300 customers in week one, with 35% of them over the age of 36. Flexigroup also says humm was the number one finance app for both Apple and Google play stores last week.

RARE TRADE SURPLUS
Update: Imports fell nearly -$1 bln in August 2020, leading to the largest annual trade surplus since 2014, Stats NZ reported today. The +$1.3 bln annual goods trade surplus for the August 2020 year reflected a rise in exports and a pandemic fall in imports over the past months. It was a turnaround from a -$5.6 bln trade deficit to August 2019. Our suplus with China rose to +$3.9 bln in the same year allowing us to run deficits with others. We are now even running annual surpluses with Australia, the USA and Japan. We run big deficits with Germany, South Korea, and Thailand. Monthly details are here.

A BILLION FOR SFA RETURN
Treasury tendered another $1 bln in bonds today. Their April 2040 offer of $450 mln drew $1.385 bln in bids and these investors bid negative -0.05% pa for this tranche. The May 2-31 tranche was for $350 mln and it received $850 mln in bids for a yield of +0.48% pa. The April 2037 tranche was for $150 mln and $548 mln was bid at an average yield of +0.91% pa. There was also a linker, an inflation indexed bond where $50 was available and it attracted $149 mln in bids. The yield here was negative -0.11% pa, plus inflation when the coupon is paid.

WATER STORAGE UPDATE
Our hyro lakes are filling faster now, and getting back closer to normal. But Auckland's water storage is now at just 67% when 90% is normal. Despite this, Auckland is considering dialing back their restrictions, on the basis that households have been saving much more that target over a long time now. But a rollback might send the wrong signals given the shortfall.

BIG BROTHER
In Australia, their March 2020 population has been counted as 25.6 mln. Recall, Stats NZ says we are approaching 5.1 mln. That means Australia as almost exactly five times our population. Most of Australia's growth comes from immigration.

GOLD PRICE EVEN SOFTER
The gold price closed in London at US$1873/oz and down -US$33 on the day (-1.6%). It fell further by -US$10 in New York to close there at US$1863. But in open trading on Asian markets it is now slightly firmer at US$1867. Silver has fallen -6.6% today.

EQUITIES UPDATE
At the close, the S&P500 ended down -2.4% (after yesterday's +1.0% rise). The Wall Street NASDAQ fell -3.0%. Shanghai has opened down -0.9%, Hong Kong is down -1.0%, and Tokyo is down -0.6% at its opening. The ASX200 is also -1.0% lower in early afternoon trade while the NZX50 Capital Index is down a much more modest -0.2%.

SWAP & BOND RATES SINK TO RECORD LOWS
Yesterday, swap rates for tenors 5 years and longer fell after the RBNZ announcement are now all at record low levels. We don’t have the final data for today yet and if it is significant we will update it here. The 90 day bank bill rate is unchanged at 0.30%. The Australian Govt ten year benchmark rate is up +1 bp at 0.87%. The China Govt ten year bond is down -2 bps at 3.10%. The New Zealand Govt ten year is down -3 bps at 0.46% and below the earlier RBNZ-recorded fix of 0.48%. Both are now record lows. And the NZGB five year is still negative at -0.05% pa now. The US Govt ten year is up at nearly 0.68%.

NZD LOWER
The Kiwi dollar down -¾c at 65.4 USc although all of this was lost last night. Against the Aussie we are marginally softer at 92.6 AUc. Against the euro we are down to 56.1 euro cents. That means our TWI-5 has fallen to 69.

BITCOIN SOFT
Bitcoin is down -2.1% to US$10,302.

This soil moisture chart is animated here.

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14 Comments

I wish government agencies would really show some teeth when dealing with banks. For a start they seem to be reliant on banks self-reporting and, when they do, the amounts they are fined are tiny by comparison to revenue/profits.

Record house sales in Canada in August too? But we are diffrunt?

https://www.fool.ca/2020/09/22/warning-canadas-housing-market-is-about-t...

15
up

Thumbs up if you agree that Orr must go !

thats to do with AML, that way they have a electronic trail to follow sounds sensible to me, you have to put the cash into your account then transfer over
there is a court case at the moment where the gang were getting people to deposit small amounts of cash into other peoples accounts to hide the proceeds
https://www.stuff.co.nz/national/crime/300102814/comanchero-trial-interc...

Interesting.
It seems that the banks are using these scenarios to accelerate the removal of branch f2f services, less cash handling services, and progressive moves to a fully cashless system.

i had to cash in my bonus bonds the other day $2 (didnt even know i had them) , they would not pay in cash, it had to go into a bank account

Today all news / articles on interest.co.nz points towards booming housing market and hoe government and reserve banks are going all out to promote.

Seriously instead of supporting business that needs assistance government and reserve bank is only interesfed in not only keeping the ponzi alive but make it bigger.

Understand that in NZ only economy is housing economy so what sort of reset is this as many experts have mentioned that this crisis should be used as an opportunuty to reset and put more emohasis on industry and business but again what the reserve bank and government is doing is taking hyper bubble in housing to next level. Need for LVR is more now than ever specially now when market is extremely high to protect finacial system insread of thinking short term.

Also now as government has put house price on fire why are they still worried about the fall - why the phobia.

Stats quo in politics should change as politicans of all parties are thick skin......

Grammar rules, ok?

All news have to be about housing as many houses are going 20% to 30% above pre lockdown price and this time no one is raising the issue of affordability in election.

Though interest rates have come down but rise in house prices have offset it and in addidtion have more debt amount than before and under FOMO many have streched in this uncertain time and also with removal of LVR margin of safety is also reduced for bank.

What is happening now is that we have offical ponzi run RBNZ and Labour Government.

Someone should ask our photo opportunist PM does she too feels that housing crisis is a good crisis like national or is she not aware of the percentage of jump in housing price by their policy and stimulus.

She is jafa property owner too
And obviously part of the elite illuminati conspiracy

Definitely a hoe government

Yo, hoe!

has it not always been the long term plan for auckland water to take more water from the waikato river.
https://www.stuff.co.nz/environment/climate-news/122718878/watercare-giv...
i guess now that has been agreed to they can start working on plan b the Waihou River