A review of things you need to know before you go home on Friday; rates react to RBNZ hike, confidence fades, affordability actually improves, wholesale swap rates rise, and more

A review of things you need to know before you go home on Friday; rates react to RBNZ hike, confidence fades, affordability actually improves, wholesale swap rates rise, and more
For Friday, July 25, 2014. Image sourced from Shutterstock.com

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

There were rate changes following the RBNZ OCR hike to 3.5%. Following ANZ yesterday, ASB, BankDirect and Sovereign all raised their floating mortgage rates by +25 bps. Nelson Building Society raised theirs but by only +20 bps to 6.95%. And the Napier Building Society, which skipped a rise altogether in the last round, has made up for it today by adopting a 6.20% floating rate, up from 5.80%.

On the investing side, ASB raised their 9 month and 12 month term deposit rates to 4.45% and 4.50% respectively. These are very good rates, matching the best for these terms by RaboDirect and Kiwibank.

ANZ's business confidence index shed a few more points in July, from a net balance of +42.8 to +39.7, and has fallen over 30 points since February. The prior levels were stratospheric, but the decline since has now been big enough to put confidence at around average levels for the recovery since 2010.

Auckland Airport has borrowed US$250 mln for 12 years at the lowest borrowing margin against US Treasuries for NZ company in the last decade. They are effectively borrowing for 12 years at less than 5%pa.

Home loan affordability actively improved in June after house prices fell, the Roost Home Loan Affordability Reports show. These falls were faster than the recent rises in interest rates.

With the rise in floating rates and the slips in fixed rates, suddenly we are finding that three year fixed rates are lower than floating rates. The rush to fix will accelerate.

One day after the OCR review and wholesale rates are moving up. Swap rates rose +2 bps for all terms through five years. The 90 day bank bill rate also rose +2 bps and is now at 3.69%.

In contrast to interest rates, the NZ dollar has barely moved today. The NZD is at 85.8 USc, is at 91.1 AUc and the TWI is at 79.9. 

You can now see an animation of this chart. Click on it, or click here.

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NZ is heading towards economic recession: 
 Contributing  factors include:
rising interest rates,   Consumer perception of rising interest rates,
declining business confidence
declining regional economic development
declining house prices outside of Auckland & chch leading to the 'poor' effect
reduced govt expenditure in schools, hospitals, universities etc on a weighted comparison
middle-class being squeezed by zero wage/salary growth and inflated rates, power, insurance etc
Deflation in many goods & services due to lack of demand
global deflation, zero interest rates, QE, signalling no recovery from GFC
geoPolitical troubles & a highly charged global environment with a US President uninterested in maintaining global security. 

And two rate cuts in 2013 - if we wait long enough that will be partly true, well the two rate cuts part, in fact I think it will be more.

How it's done - Instruction Manual - Interesting article
Australian high-rise sharp-shooting apartment cowboys are marketing their wares in Singapore using the age-old "guaranteed rent" for the first year trick - and the Singaporeans are swalowing it hook-line-and-sinker - but they are looking for ways to get around Singapore's second-home restrictions and 15% investment-property tax
That 15% tax introduced in March 2013 is driving property investment offshore
Of particular note in the article about half way down is the reference to ANZ Bank - the very same banker to Aussies and Kiwis
Singaporeans seeking to buy in Australia are able to borrow (in Singapore) at significantly lower interest rates than their local Australian counterparts.
ANZ’s Singapore Branch is currently advertising a standard variable interest rate of 1.17 per cent.
By contrast, ANZ Australia Branch standard variable interest rate currently sits at 5.88 per cent.
Is ANZ's global cost of funds in Singapore any different to its cost of funds in AU and NZ?
Kimy has been telling you this for 6 months - no detail - now you know which bank and where

Australia 2 year rate = 4.8% 
at least their Reserve Bank is aware of global conditions.