A review of things you need to know before you go home on Monday; record low mortgage rate, flurry of term deposit cuts, NZ's high living standards, fruit exports surge, FMA warns

A review of things you need to know before you go home on Monday; record low mortgage rate, flurry of term deposit cuts, NZ's high living standards, fruit exports surge, FMA warns

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

TODAY'S MORTGAGE RATE CHANGES
A new all-time low interest rate was announced today by BNZ. Their new two year 'special' is 4.69%, a rate which hasn't been this low since at least 1964 when the earliest RBNZ data is available. TSB Bank also announced their floating rate cut to 6.24%. The Police CU also cut their floating rate to 5.74%. And AMP Home Loan also announced their floating rate cut to 6.64%

TODAY'S DEPOSIT RATE CHANGES
There has also been a flurry of term deposit rate cut announcements. Kiwibank cut across the board, and other reductions came from Heartland Bank, UDC, and NZCU Auckland. There were also savings account reductions, from SBS Bank, Westpac, Police CU, and Heartland Bank.

SURPRISE RESULT
A new study by Motu has found that most kiwi families have a high standard of living with inequality falling, contrary to what GDP statistics tell us. The same data shows that housing is putting us under pressure.

ANOTHER TRADE POSITIVE
The annual value of fruit exports reached an all-time high of $2 billion in the year ended June 2015, Statistics New Zealand said today. The value of fruit exported rose 20% - up $330 million - for the June 2015 year when compared with the year ended June 2014. Kiwifruit (59%), apples (28%), and avocados (6%) made up 92% of the value. Both higher prices and a greater quantity of exports (up +9%) contributed to the overall rise. This news comes after data last week showed that tourism is about to overtake dairy as our biggest export earner.

FMA WARNING
The Financial Markets Authority has issued a Stop Order against Green Gardens Finance Trust Limited and warns the public to be wary of doing business or depositing money with this company. The Stop Order is published here and prohibits GGFT from offering, issuing, accepting applications for or advertising debt securities, or accepting further contributions, investments or deposits for debt securities. It is a company owned by Gang Wang and Yan Zhang.

WHOLESALE RATES FALL
NZ swap rates flattened and fell as expected today. The 2 year was down -1 bps, the five year down -2 bps. The 90 day bank bill rate was unchanged at 3.06%.

NZ DOLLAR UNCHANGED
The NZ dollar is basically unchanged on the day at 66 USc, still creeping higher against the Aussie at 90.5 AUc, and 60 euro cents. The TWI is still at 70.8. Check our real-time charts here.

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12 Comments

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Shanghai down 8.6% at the close. Now what, Comrade ?!

Bid lower at the next GDT auction.

With massive oversupply/lack of demand problem that there is, I don't even know where I'd stick my first bid in! Wherever it is "Yours!" comes to mind.....

Offer through the bid stack?

Is there likely to be one? That offer might stand lonely in the market, desperately looking for a mate. ( We got caught in the Aussie/Kiwi option sell down in the late 80's. Being caught limit long, along with everyone else. It's a sobering thing when no one on the planet will answer the phone....)

Bid $1000 - just make sure it's cash settled - you won't want delivery - cancel if not filled

LOL - commodity futures exchange delivery failures have had to resort to cash settlement - failure to deliver is big business in the US and the penalties less than a slap on the wrist - especially in the RP market, which inevitably makes a mockery of the whole process. Hedging against cash - yeah right - just means infinite paper contract trades can flood the market to the downside. It's happened in the stock market on a too regular basis, where the open short interest is greater than the registered issuance - have the authorities jailed the participants? - no, never.

In 2 sessions of trading it has given back nearly all the govt supplied gains - step aside folks

the government was never going to be able to keep buying, wait for the stories of debt laden companies and shadow finance cos to fall over. the house of cards is starting to wobble

Re the Chinese market fall - Is that the bell ringing for the second time.
Were these "students" deals the bell ringing for the 1st time
http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=1148...

Nah - its different this time

Another excellent case study of a financial bubble in the making. Like bitcoin, gold, housing and tulips; gravity inevitably wins in the end.

The question you have to ask is, what is the intrinsic value of something when you can't expect to sell it to a greater fool for more.

A very good point on different levels. a) shallow view, The interesting thing is when you see a big drop (and its coming) there is always a significant undershoot, 20%+ even 30% seems typical. The long term trend in housing is 3~1 maybe 3.5~1 in price to earnings, currently we are at 8 or 9~1 so a 60% drop is quite possible. of course the financial implications of this is quite sever, but its nothing compared to b)

b) Deep view, the above of course assumes a BAU scenario when we have a grow for ever economic model on a finite planet fueled this high by fossil fuels. However oil is gone by 2050 and the output per day will shortly decline in the run down to that. So without oil to power the present industrial economy which supports the debt and growth just what is a fair price for a house? If you go back to pre-1850 or so and trend from say 1600 you get a long term value of less than 10% of present values. So a $400k house is worth maybe $40k.

So who is the greater fool? some ppl at a) or everyone at b)?