What happened Friday

A review of things you need to know before you go home on Friday; NZ$ falls, farmers gear up, strong ANZ, Kiwibank mortgage growth, Jenny Shipley faces lawsuit, Auckland building consents rise

29th May 15, 4:06pm by Greg Ninness

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

TODAY'S MORTGAGE RATE CHANGES
Sovereign increased its one year special mortgage interest rate from 5.1% to 5.35%.

TODAY'S DEPOSIT RATE CHANGES
BNZ raised (yes raised) its 9 month deposit rate from 4.20% to 4.25%. Heartland Bank reduced the interest rates on all of its savings accounts.

ANZ's BUSINESS OUTLOOK SURVEY POINTS TO DECLINES IN CONFIDENCE, INVESTMENT AND ACTIVITY
The economy is transitioning into a more modest pace of expansion, ANZ said as its NZ Business Outlook survey showed businesses have reduced their expectations in regards to employment, profit, investment intentions and export expectations. The declines were broad across the survey and were starting to look more like a trend, ANZ said.

NEW HOUSING CONSENTS IN AUCKLAND UP STRONGLY
There was a sharp jump in the number of new dwelling consents issued in Auckland in April, the third straight month of solid rises in the region's consent numbers. However they declined in much of the rest of the country, including Wellington and Christchurch. There was a particularly big increase in the number of new apartments being consented, which reached a seven year high.

AUDITOR-GENERAL LAUNCHES INQUIRY INTO FEELEY FAMILY'S QUEENSTOWN LAND PLANS
The Auditor-General has decided to carry out an inquiry into how the Queenstown Lakes District Council and its chief executive, Adam Feeley, managed Feeley's interest in land owned by his family, which was being considered by the council for a Special Housing Area.

JENNY SHIPLEY FACES HIGH COURT ACTION OVER MAINZEAL COLLAPSE
The liquidators of collapsed construction company Mainzeal have filed High Court claims against several of its former directors, including former Prime Minister Jenny Shipley and Sir Paul Collins, alleging they failed in their directorial duties by allowing the company to continue trading while it was insolvent. The liquidators are reportedly seeking around $50 million from the eight defendants, including Shipley.

ANZ, ASB, KIWIBANK STRONG IN HOME LOAN MARKET
ANZ NZ grew its home loan book by a net $1.275 billion in the March quarter, or 2.1%. ASB grew its book by a net $746 million, or 1.8%. Westpac NZ had net growth of $465 million, or 1.2%. BNZ also recorded 1.2% growth, or $360 million in its case. Kiwibank grew home loans by a net $304 million, or 2.2%. Reserve Bank sector credit data for housing loans showed 1.6% March quarter growth.

Meanwhile, residential mortgage borrowers are continuing to move to fixed term loans. By the end of April 73.7% of home loans by value were fixed, up from 73.1% in March, and 26.2% were floating, down from 26.9%.

FARMERS GEAR UP
As dairy farmers come to grips with lower payouts from Fonterra, the rural sector has been gearing up. The latest Reserve Bank sector credit data shows agriculture debt rose 6.9% year-on-year in April, its fastest percentage growth since January 2010, to $55.407 billion. Elsewhere business credit rose 6.6% to $85.709 billion, and consumer debt rose 5.9% to $15.137 billion. Housing debt, meanwhile, rose 5.2%, its fastest pace of increase since June 2014, to $200.798 billion.

WHOLESALE RATES DOWN
The 90 day bank bill rate dropped -1 bps to 3.47%, while longer dated swap rates have fallen 5 bps across the entire curve.

NZ DOLLAR DOWN
As of late this afternoon, it was down at 71.4 USc and 65.2 euro cents. Most notably, it decreased about a cent to 93.2 AUc. The TWI-5 is at 76.1. Check our real-time charts here.

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

Daily exchange rates

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Source: RBNZ

Source: CoinDesk

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33 Comments

by Stephen L | 29th May 15, 5:42pm 1432878137

Does anyone any longer not believe the next chance the Reserve Bank has to drop the OCR, they will do so? The ANZ confidence survey above seems to be just another nail in the coffin of any plausible expectations that inflation will race back to 2% any time soon. The only reason not to drop would seem to be pig headedness in avoiding an implied admission they were wrong last year. I thought Michael Reddell formerly of the RBNZ, and now with his croaking cassandra website, has summarised the arguments very well.

by MortgageBelt | 29th May 15, 5:58pm 1432879095

Yes, I do. Unfortunately last time it took a GFC and a major earthquake to finally cut the OCR.
Yes, they were wrong to hike last year, but it's hard to shake a hiking bias.

by Stephen Hulme | 29th May 15, 7:23pm 1432884198

Read his lips.

The rise in Auckland house prices reflects ongoing supply constraints, increased demand driven by record net immigration, low mortgage interest rates and increased investor participation. House prices have become very elevated in Auckland, and financial stability could be tested if prices were to fall sharply, which could occur if adverse economic conditions led to a reduction in debt repayment capacity. Read more

How do you think debt repayment capacity will materialise if lower interest rates pull forward future financial productive property gains that more than offset any export currency gains?

by steven | 29th May 15, 9:07pm 1432890422

How do you think debt repayment capacity of the private sector AND Govn will go if we go into a recession and even a depression? wont do well at all will it? How about where will the pension funds etc get the returns to pay private pensions etc from in such an extended recession? What are they doing now? gambling in risky endevours to get yield? how long before they get badly unstuck and lose "our" collective shirts?

by Stephen Hulme | 29th May 15, 8:20pm 1432887628

Reddell is no longer employed by the RBNZ, following the government's most recent employment austerity pogrom. Doesn't make him a bad person, but unless he stands up to test his theories with his own capital, as many do, he if just one of boatman's chattering class cohorts - possibly unemployed - until he is not. I have remained unemployed for longer than I ever worked.

But I certainly think this Reddell exposure ploy smacks of a misery loves company prank.

by MortgageBelt | 29th May 15, 8:18pm 1432887527

Sobering reading - RBNZ Home Page - .1% Inflation [That's Point 1%].
That must be symptomatic of the real economy beyond just petrol price declines.

by Stephen Hulme | 29th May 15, 8:32pm 1432888342

Since the government defined housing out of CPI, it has enabled economists to ignore housing inflation as a component of inflation. In fact, anything that isn’t a consumable doesn’t count toward inflation. Housing inflation doesn’t count. Land inflation doesn’t count. And the inflation of financial assets like stocks and bonds doesn’t count. The only inflation that counts is the inflation of stuff that people consume. It has become a convenient excuse for ignoring all of the fallout and dangers of the most insidious kind of inflation–asset inflation. Since asset inflation makes the plutocrats richer, their handmaidens in the economics field and the Wall Street captured media see nothing wrong with it. Read more

by steven | 29th May 15, 8:54pm 1432889678

Most of the first lot are investments and therefore should not be in CPI or core. To be simplistic, you dont consume investments unlike say petrol or tomatoes. If nothing else just how many consumers own shares? If shares go up because the company is doing well and has a good dividend how is that CPI related? if the opposite? it makes no sense. Housing inflation? Ok but many areas outside of the few loony ones in Auckland are not doing well or even declining. If I buy a house today there is then no CPI component for say a 10% price increase, I have not consumed it, it is a profit.

Otherwise yet more ranting by a right wing "they are hiding inflation" American loony, they seem never ending. Simple really if you think there is significant 'real" inflation and its being "hidden" then you should take advantage of that and invest accordingly, you are bound to make heaps as the rest of us fools ignore these "gurus"

All this of course ignores why we look at CPI and core inflation, to study the real health of an economy not cherry pick the bits you like to justify your "oh my god here comes [hyper-]inflation" narrative to sell say gold, otherwise bad policy is enacted which makes the economy worse.

by Stephen Hulme | 29th May 15, 9:42pm 1432892530

The point is, totally unrelated to consumer demands, negative interest rates are a function of a sovereign collateral shortage in the interbank lending market (ie repo fails in a rehypothecated asset structured world). The financialisation of financial markets exists entirely beyond the realms of the real world. Citizens just endure the backwash - you cannot hang real world needs upon the machinations of the shadow banking system.

by steven | 29th May 15, 8:58pm 1432889922

It is indeed my worry that this is the case. When it goes negative just what will Dr Wheeler's excuse be then? "oh dont worry about yet another 1/4" ? yeah right. The annoying thing is I see no logic (for not dropping), if it was explained and logic and supportable, OK, no issue, we'll wear it. Otherwise wtf is the clown doing????? Ever worse figures and he ignores it.

by Stephen Hulme | 29th May 15, 10:01pm 1432893697

Otherwise wtf is the clown doing?????

You really are an offensive prick.

Ask Chaston for my contact details so I can invite you around to knock your block off on the governor's behalf.

by Kakapo | 30th May 15, 8:17am 1432930656

Macho threats of fisticuffs over Reserve Bank policy??

There's nothing about this that isn't hilarious.

by cowboy | 31st May 15, 4:59am 1433005174

Sounds like a decent response to me. At least unlike yourself he's not condoning a public official who packs his boots with a huge salary at the pubiics expense, while being completely ineefective as his no risk job.

by King of the whiners | 29th May 15, 10:04pm 1432893861

The economy is growing at 2.5%-3%.

The Auckland housing market is growing at 10% plus per year.

Inward migration is running at near record levels.

The Canterbury rebuild has at least 12 more months of running red hot before it even begins to cool.

Petrol prices have risen nearly 20% in the last 3 months.

Interest rates are already set at stimulatory levels (the RBNZ state levels 0.5-1% HIGHER than where they are now are neutral).

Will you people whining for interest rate cuts just get real (and maybe next time not swallow so much debt that it makes your critical faculties warped). NZ is not remotely close to a recession, interest rates are already set at stimulatory levels, and the RBNZ needs to husband all its rate cut ammunition for when the poo really hits the fan at some point in the future.

by don'tgetmegoing | 29th May 15, 10:25pm 1432895132

Rumour has it that in private Bill English has admitted that NZ is in recession, now

by King of the whiners | 29th May 15, 10:30pm 1432895455

Granted that English is not the brightest bulb in the box, but I rather think a host of indicators and surveys make that contention ridiculous (apart from the fact that since the most commonly held parameter of a recession is two quarters of negative growth, and since we know the last quarter was anything but negative, the possibility is rendered impossible by definition).

by MortgageBelt | 29th May 15, 10:42pm 1432896156

Dairy farmers debt? Regional areas economies outside of Auckland/Chch? Wage/Salary freeze? Export/small manuf/processing companies? Govt flat spending having a deflationary effect? GDP masks a lot of recessionary symptoms.

by Stephen Hulme | 29th May 15, 11:05pm 1432897540

Dairy farmers debt?

Purely a function of a perception that lower interest rates warrant ratcheting up the purchase price of the neighbour's land - those that sold early, sold best and languish in the sun elsewhere. The rest endure incomeless penury.

The stark reality is that ZIRP and QE only foster asset inflation and not much else.

FRANKFURT, May 29 (Reuters) - Lending throughout the euro zone failed to grow in April after a promising uptick a month earlier, a slip that tempers hopes for a rapid turnaround in borrowing to boost the economy.,/i>

European Central Bank data showed on Friday that overall lending growth to households and firms was unchanged in the month, despite the recent launch of a massive money-printing programme to bolster the 19 countries in the euro bloc.

Although the fact that lending is holding steady is positive in itself, following years of decline, the stagnation in April will disappoint those who had predicted a modest improvement, including in a Reuters poll.

Sparse lending to companies has dogged the struggling euro zone economy although the picture had been improving and policy setters including ECB President Mario Draghi believe that the bloc is recovering.

But the fact that banks are lumbered with billions of euros of loans that may go unpaid and consumers and companies are wary of borrowing is blunting the full impact of the 1 trillion euro-plus ECB scheme to buy chiefly government bonds.

Although overall lending is flat, detailed data shows that lending to companies or consumers is actually in decline, with only borrowing by home buyers brightening an otherwise bleak picture. Read more

by don'tgetmegoing | 29th May 15, 11:10pm 1432897838

If it was GDP per capita being considered recessionary symptoms would not be masked. The only things we are relying on at the minute are the ponzi scheme of immigration, Christchurch and tourism (a third world industry, in reality, if ever there was one).

by Grant A | 30th May 15, 9:24am 1432934683

I'll add to that King, tourism booming, a housing building boom, and most other commodity prices outside of dairy holding up. The whiners in my expereience are generally the half glass full types and the over-leveraged who criticise others for their dairy debt on an income producing asset (be it a bit less currently) whilst at the same time screaming for lower interest rates to bail them out of their bad borrowing decisions on a noin-earning, or poor earning asset - a few of them reside here..

by King of the whiners | 30th May 15, 9:40am 1432935640

Now hang on a minute there Grant, I am officially King of the whiners, I don't want you bestowing my title elsewhere........

However, you are of course correct, methinks this entity 'Steven' for example has buried itself under too much mortgage debt and as a consequence only has a single drum to beat. It is most tiresome.

by steven | 30th May 15, 1:05pm 1432947931

You have a great deal in common with the short termers, can only see today and tomorrow. Then as a finance type that isnt surprising, you think you can see out at any point and live happily ever after.

The 1/2 empty types such as myself however look past the noise of today and realistically see we have big issues looming, so you pray its going to be OK, I plan for it to be OK.

Certainly your comment on over-leveraging does not apply to me, except any debt right now isnt too great an idea.

by cowboy | 1st Jun 15, 11:25am 1433114745

Put your money where you money is Grant

Top performer, 10% production increase over last year. costs down by 20%. good management all round.

Easy to poke fun when the other guys drowning.

Yes I had to pay rent (3% on value of property). How much are other farmers paying on the equity in their farms? Oh they get several million dollars stored equity (most through capital gain remember!! that they never had to pay up) of which for those millions of dollars of equity they pay nothing to use!!!

Yeah, I too can float a lead boat with that much FREE equity.

Some of my personal income (wages) was paid back into the company to cover the extra interest ($1500 a money, hardly company breaking) from the high borrowing.

But also as well as having MILLIONS in free equity a lot of those farmers have _decades_ of investment in equipment and property management from times which were much less expensive, and not nearly as many regulatory bodies were breathing down their neck.
Fencing off waterways alone, reduced my land area from 61 ha to 59.5 hectare. No change in rent. That's a 2% drop in _gross_ margin. you see many companies wearing that, let alone paying and labour for free to do it.

So I'll accept your profound apologies since I'm betting you're too cowardly to do so in writing, since you're clearly to ignorant to bother researching your prejudice properly.

by Grant A | 31st May 15, 9:21am 1433020887

Cowboy re-read my post. I wasn't criticising dairy farmers in fact the exact opposite. I have alot of dealings with the industry and individual dairy farmers and have great faith in their abilities, and ability to knuckle down through this challenge they have at present. I was talking about the home owners who criticse income earning dairy debt, whilst ignoring their own over-leveraged situation they have put themselves into and scream for rate cuts to bail themselves out. No need to apologise for the mis-read :-)

by cowboy | 31st May 15, 10:14pm 1433067283

I was the "glass half full" and the idea that those who speak out are just whiners and don't know what they're doing. THAT is the attitude that got Fonterra and dairy farmers in the trouble they are in today - they go on a "we'll make it right", "we're the best","don't question the experts" method of thinking and when it doesn't work and people are screaming - it's never them, it _must_ be because the others are whiners and have made mistakes like being overloaded with debt.. It must be, it can't be the glass half full types.

Agree about debt not being the way out! Anyway who says that is crazy and needs to marry my ex. She liked paying off debts with credit cards (we couldn't afford the basic debt, how was paying interest on top of the problem ever going to fix it.).

that is why this rat finally had enough and left ship - I can grab some debt for capital work - like a herd, or a strategic runoff; but the moment the company starts funding working capital/funds by accumulated long term debt (to be paid off in the indeterminate future) then the business has failed.
In Dairying case it was one thing after another - extra fencing, effluent ponds, renovated equipment, extra cooling, every year their was another excuse, another compulsory must have, if the customer isn't paying for those extras then no business can survive like that, and debt is just the way to lose your capital.

by steven | 1st Jun 15, 8:19am 1433103555

Or how about the eco-system? "if the customer isn't paying for those extras then no business can survive like that." In business terms only I agree here. I think there is a great disconnect between consumers ability to pay what others demand (whether fairly or not) that many economists and businesses on the right wing (for want of a better tag) failed / fail to recognise. Therefore the price of the farm ie the size of the debt/mortgage repayments mean if the above is compulsory (which it should be) and the consumer cant be milked for ever more then the owner paid too much, simple.

"glass half full types" frankly if their beliefs were based on reality and logic we'd be good to go, but it isnt, its just ever repeating mantra "it will be alright", "the consumer will pay no matter what" etc etc.

As an example Grant A here refuses to accept peak oil is here and set a financial strategy for that. Yet we are on a finite planet with adequare data showing Peak oil while wedded to the need for exponential growth type financial system. It is going to come unstuck, that is simple irrefutable math.

by cowboy | 1st Jun 15, 11:32am 1433115139

Ok I will apologise, I do see what you're saying now you given extra context.

As I mentioned those who fail in dairy farming get labelled whiners. They get told it's because they had too much debt, or that they just wasted their money or must of been poor farmers.

We get told that because we speak up we're whining and others are doing "just fine", and that if we want to "stay in farming you have to day the bad years as well as the good, and just talk nicely to the bank to extend your overdraft or do interest-only on all your loans until things pick up." Note that these are the same group that same that you fail because you've got too much debt. (not that their aren't some that do take on too much and too many "toys" (eg fancy mixer wagons)

On the other end, we're cutting corners to make budgets meet, but then get blamed for being anti-progress and anti-technology. Town people think we're being greedy or psychotic because we're upset about giving away a large chunk of our small profit

by Grant A | 1st Jun 15, 11:47am 1433116048

No need Cowboy, if I had seen the posting and interpreted it as you did, I would have probably had a similar adverse reaction. Although I've run some businesses, I have never actually owned one, so I have always had a huge respect for those small business owners who risk their own capital, employ others, work monstrous hours to make it work, and live on the smell of an oily rag when times are tough....that's definitely farmers over the cycle, and that's most definitely diary farmers at the moment.

by MortgageBelt | 30th May 15, 11:16am 1432941366

Business confidence falls
business-confidence-takes-a-dive-but-from-high-levels

by iconoclast | 31st May 15, 11:43am 1433029426

It's Sunday - It's a slow day - Bernard is MIA - missing in action

Here is what you don't get in Auckland - maybe a good thing

Here is a sample of what happened property-wise in Victoria yesterday
That's the entire State not just Melbourne
This is shown as an example of how poorly nz is served by REINZ
At least Greg Ninness and Interest.co.nz are having a go

In spite of announced buying restrictions and near recession conditions
Big money was splashed as 1041 homes went under the hammer
http://news.domain.com.au/domain/real-estate-news/reserves-smashed-as-m…

And

published today by realestateview is a full list of all sales for the week by suburb/region
Up-to-date as of last night
http://www.realestateview.com.au/propertydata/auction-results/victoria/…

Remember Victoria has a population the same size as New Zealand
VIC sells 1000 properties a week in a very good week
That's 50,000 per year if you knock out holiday weekends and Xmas
New Zealand turns over double that

by Andrewj | 31st May 15, 11:46am 1433029612

holy cupcakes batman, are they onto a winner.

You could sell a house in Melbourne and buy a nice little dairy unit in Matamata.

by steven | 31st May 15, 3:51pm 1433044290

Just when you thought it was safe from the doomsters,

http://www.doomsteaddiner.net/blog/2015/05/30/the-crash-of-2015-going-g…

by sharetrader | 31st May 15, 11:13pm 1433070815

we seem to get an event or if you want to call a crash every few years, from black Wednesday, dotcom, sep 11, GFC, so we are well and truly overdue. our banks have been stress tested for a 50% drop that is scary in itself. our economy is only surviving on the Christchurch rebuild and Auckland immigration if that slows we could be into recession