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A review of things you need to know before you go home on Friday; more mortgage rate changes, more confidence, more housing debt, less business borrowing demand, swaps firmer, NZD holds, & more

A review of things you need to know before you go home on Friday; more mortgage rate changes, more confidence, more housing debt, less business borrowing demand, swaps firmer, NZD holds, & more

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

MORTGAGE RATE CHANGES
Kiwibank has advised it is lowering its 2 year fixed rate to 2.55% on Monday, and raising its three and five year rates.

TERM DEPOSIT RATE CHANGES
No changes to report today either.

MORE CONFIDENT - OF HIGHER PRICES?
The latest ANZ-Roy Morgan consumer confidence report for April shows confidence lifted +4 points to 115 in April - but still nowhere near the pre-pandemic 122 level. The proportion of people who believe it is a good time to buy a major household item, a key retail indicator, also lifted +4 points to +18. Inflation expectations bounced back to close to recent highs, while house price inflation expectations were unchanged.

ENDING THE SEASON STRONGLY
Fonterra said today that total New Zealand dairy exports increased by almost +21%, or +61,795 MT, in March compared to the same period last year, the highest March volume on record. The increase was driven by higher volumes of WMP, fluid milk products and cheese to China, which accounted for almost 90% of that rise. Australia, the EU and the US also reported strong rises in shipments to China. Also, Fonterra sais it milk collection for March was 138.2 million kgMS, +7.9% higher than the same month last season, driven by North Island collections.

MORE DEBT
SkyCity (SKC) is about to raise up to $175 mln via a 6 year unsecured, unsubordinated, fixed rate bond issue. The interest rate margin over swap has yet to be announced. These are likely to be rated BBB-, so just within the "investment grade" criteria.

MORE DIPS INTO THE WELL
Yesterday, the RBNZ's Funding for Lending program disbursed another $12 mln (unknown recipient). And today it disbursed another $100 mln, this one to Kiwibank, taking their funding from this source to $200 mln.

DO-NOTHING EMBEDS INEQUITIES
The Government has taken the easy way out in its review of funding fire and emergency services - continuing with the levy on people who pay insurance. Of course, that makes insurance more expensive causing many to underinsure, and loading the funding tax heavier on to those who do insure for a community service. New Zealand is unusual in using this policy style to fund fire and emergency services.

SMALL COMMERCIAL PROPERTY SOUGHT AFTER
Properties with development potential were particularly sought after at Bayleys' latest commercial property auction

GOVERNMENT MAKES UNANNOUNCED CHANGES
KiwiBuild has not been a first-home buyers' scheme since mid-2020. A just-released Cabinet paper from March highlights the Government temporarily broadened the eligibility of the scheme in July 2020 more than it let on at the time. It enabled current or former homeowners to buy a KiwiBuild home provided they have no “legal or beneficial interest” in a home when they settle on the KiwiBuild home.

A FASTER SURGE
The growth in housing debt rose +9.7% in March from a year ago, the fastest rise since April 2008. Banks are pumping it out on very high customer demand. That is a +$3.7 bln rise in just one month to $308.7 bln, the largest dollar rise in any month ever.

A FASTER PULLBACK
Meanwhile, lending to businesses is shrinking. It was down -5.2% in March from a year ago to $116.7 bln and back to levels of almost two years ago.

SAVING BUT NOT WITH INTEREST
Household bank deposits swelled +8.3% year-on-year or +$3.2 bln in just one month, and the most since the pandemic shock a year ago. In contrast, household term deposit balances fell to $84.8 mln, down more than -$1.6 bln in a month and continuing the -$1 bln/month pace we have seen for the past nine consecutive months. These balances are now -16% lower than a year ago.

ANZ WARNS
ANZ Group has softened up the market ahead of next week’s interim results, by warning of an -AU$817 mln after tax hit to profits.

GOLD SLIPS
The gold price is falling quite fast today. It is now at US$1768/oz and down -US$18 from this time yesterday. And that is -US$4 lower than the New York closing price. But it is +US$5 higher than the closing London fix.

EQUITIES MIXED BUT HIGH
The S&P500 ended today's session up +0.7% and a new record high. In Shanghai, it has opened -0.7% lower and Hong Kong is -1.5% lower at their open. The very large Tokyo market has opened down -0.5% in early trade. The ASX200 is down -0.5% in early afternoon trade while the NZX50 Capital Index is down -0.1% in late trade. The ASX200 is heading for a weekly loss of -0.4%. The NZX50 Capital Index is heading for a weekly gain of +0.4%.

SWAPS & BONDS FIRMER
We don't have today's closing swap rates yet. If there are significant movements today, we will note them here later when we get the data. They are probably little-changed. The 90 day bank bill rate is up +1 bp at 0.36%. The Australian Govt ten year benchmark rate is up +5 bps from this time yesterday at 1.70%. The China Govt ten year bond is up +1 bp at 3.21%. And the New Zealand Govt ten year is up +4 bps at 1.66% and well above the level of the earlier RBNZ fixing at 1.62% (+1 bps). The US Govt ten year is up +3 bps at 1.65%.

NZ DOLLAR STABLE
The Kiwi dollar is now at 72.5 USc and unchanged from this time yesterday. Against the Aussie we are also unchanged at 93.2 AUc. Against the euro we are stable at 59.8 euro cents. That means the TWI-5 is now at 74.1.

BITCOIN SLIPS AGAIN
The bitcoin price is now at US$53,577 and -1.8% lower than this time on yesterday. In the past 24 hours, volatility has been moderate +/- 2.2%.

This soil moisture chart is animated here.

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37 Comments

35
up

+9% lending to property -5% lending to business. Now why do we suffer from productivity issues hmmm...

27
up

Some career politician from the Green party has demanded there be residency given to all temporary migrants and amnesty to all overstayers.

So they want us to put up a sign board to the world that our new permanency requirements from migrants is just for them to be here - no questions asked.

And don't worry about visa rules - we give our gang members and overstayers all kinds of special treatments that the average Kiwi doesn't deserve!

18
up

"Go Woke, Go Broke".. that or get smashed up while you're walking down the street in Labour's New Zealand. Good luck to us all.

15
up

I'm not an advocate of gangs, but they are a symptom of society and fill the void left for a displaced people with few economic prospects.

19
up

There is something very sad about gangs. Children join - they are not exceptionally dumb kids; they can see that gang membership brings a small chance of getting wealthy but probably only temporarily; a far bigger chance of violence and criminal record; no chance of a happy contented future. So why join? The only reason is we are producing kids who are desperate to belong to anything. In other words their family life is crap or non-existent. There is something rotten in our society.

Solo mums....

Dropkick Dad's

Our benefit system nudges couples apart. It could do the opposite - universal child benefit to both parents if cohabiting; a govt paid bonus to get married (it would taxpayers in the long run), more accommodation allowance for cohabiting couples

15
up

Mendez March is Mexican so go figure. This is certainly the reason we would have been well served by NZ First retaining at least one seat in Parliament.

So what if he's of Mexican origin, don't you like brown people?

You can’t be serious.. you bang on constantly about Europeans being here yet you’ll allow a Mexican born take advantage of our decadent public servant trough??

i don't bang on about europeans being here and i also don't see a any difference between you or him, just a few years apart in arriving.

Mendez March looks Spanish to me.

Well only half of me is European. It’s the regressive, separatist types like yourself that are the real threat to social cohesion here in NZ

.

11
up

The same guy also says our partnership visa rules are 'really archaic' for expecting that people in genuine and stable relationships are inherently supposed to be sexually exclusive.

Green leadership includes recent migrants so they know what they are talking about? Having worked for Department of Internal affairs in times past the guards at the gates have long since retired. Even if that select group that used to make calls on suitability were to exist now they would be cancelled by the very people they might not have allowed in.

Everyone should read the headings "A FASTER SURGE" combined with "A FASTER PULLBACK" and (if you don't already) realise the government and RBNZs actions or lack thereof are still perpetuating unproductive asset speculation while discouraging productive investment.

Expect another 6 years of stupidity unless it all blows up in their faces. At which point they can pass the hot potato onto the next mugs who will do the same.

Why 6 years? I don’t hear any Party having a go at the QE madness.

Labour's latest efforts to placate have now worn thin. The next round of vitriol is upon them.

Each new/repackaged stall tactic is wearing off quicker than the last.

16
up

Good god another 3.7 bill in a month. Stop and pause and imagine what will happen very very quickly when this amount of cash stops getting pumped out.

It ends up like Cool Runnings.

13
up

They can't stop, they know they can't stop. If they stop it all starts to implode.

Do not worry as the prime minister of NZ has made a commitment that come what may will not allow house price to fall and once she does a commitment , she will never listen to herself or logic or advise as commitment is a commitment so chill and borrow as much as have assurance from prime mininister of the country and if any one has to worry, it will be them as they have more at stake than individual who is actually borrowing.

Hey David and team,

I've reported this comment due to blatantly false statement of PM making a commitment that house prices won't fall.

Interested to see your approach to blatant falsehoods.

Not so blatant though is it? She said in a press conference that kiwis expect house prices to increase. That could be interpreted as “I’ll do anything to stop house prices falling because that’s what my voter base wants”.

It’s actually correct what she said... kiwis do expect house prices to go up and it is on average their larger investment ...75% of kiwis wealth is tied up in the house as a general rule

Whether it can continue? And no she didn’t say she would do anything to stop them falling, and by removing the interest deductibility she has drawn a line in the sand I think

I’m not saying she’s wrong. I’m saying that she is now in between a rock and a hard place - will she continue the status quo or will she go against the grain. This will be the true test of her leadership

I’m not saying she’s wrong. I’m saying that she is now in between a rock and a hard place - will she continue the status quo or will she go against the grain. This will be the true test of her leadership

I hope can see the difference between
'Most people expect xxxx to happen' and
'I commit to you that xxx will happen

The growth in housing debt rose +9.7% in March from a year ago, the fastest rise since April 2008. Banks are pumping it out on very high customer demand. That is a +$3.7 bln rise in just one month to $308.7 bln, the largest dollar rise in any month ever.

Around 60% of NZ bank lending is dedicated to residential property mortgages held by one third of already wealthy households because the RBNZ offers them an RWA capital reduction incentive, to do so. And 7% of depositors account for 60% of created deposits.

Bank lending to housing rose from $50,788 million (48.36% of total lending) as of Jun 1998 to $305,039 million (60.75%) of total lending) as of March 2021.

Business lending fell 5.2% for the year ending March 2021 while agriculture lending fell 1.3% over the same period.

Too soon to declare a bubble?

13
up

'The growth in housing debt rose +9.7% in March from a year ago, the fastest rise since April 2008. Banks are pumping it out on very high customer demand.'

No, 'customers' are responding to the ridiculously low mortgage rates & the willingness of the banks to lend eye-popping amounts to people on very moderate incomes. Everyone wants as much of the Ponzi as they can get, this is clear irrational exuberance and a speculative mania but the runaway train cannot slow down for fear that it will derail.

I share your sentiment Tom, but we would be laughed at and ridiculed among the top brass within banking circles.

37% of investor make approx $9000 loss now and with change in Tax will be approx $15000 Plus.
https://i.stuff.co.nz/business/property/300288828/govt-crunches-numbers-...

Are this investors buying houses for return or Capital gain as argument in support of Speculators is that they are investors but are they ?

taimaiakka0 : That is a very, very good point.

meanwhile barclays in UK annouce doubling of profits - amazon massive increases US strongly rebounding all going to lead to interest rate rises --- even a 2.5% rise would cause severe stress and poof the bubble will start popping !

Surely the decline in business lending is a reflection of commercial banks being in competition with taxpayers through governments Small Business Cashflow Scheme (SBCS) scheme? Until 2024 taxpayers will be New Zealands preferred business bank!