A review of things you need to know before you go home on Monday; NZHL raises rates, Renzi and Italy fail, commodity prices up for 6th time, Barfoots sales weak, swaps sink, NZD slips

A review of things you need to know before you go home on Monday; NZHL raises rates, Renzi and Italy fail, commodity prices up for 6th time, Barfoots sales weak, swaps sink, NZD slips

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

MORTGAGE RATE CHANGES
NZ Home Loans raised their 3, 4 and 5 year fixed mortgage rates.

DEPOSIT RATE CHANGES
TSB Bank dropped its 1 month rate to 1.5% (previously it was 2%).

THE MAIN STORY
This summary is everything you need to know other than the John Key resignation. We have stories about that here, here and here.

SWAMP DRAINER FAILS
Following up our 90@9, you should know that the Italian government has resigned following the defeat of its reform of the Italian Constitution. It is worth recalling that PM Renzi was elected as the anti-establishment outsider. It has all come to grief in the usually fast Italian tradition. This will lead to corrosive instability in a key eurozone member. Democracies around the world are having issues making key reforms. Reactionary forces are in ascendance.

COMMODITY PRICES UP AGAIN
The ANZ Commodity Price Index rose a further +0.7% in October. This was its sixth straight rise in a row. The index is +4% higher than at the same time last year. There were mixed movements between the different commodities in October. Wool (-6.8%) and beef (-5.1%) suffered the largest falls. Butter (+6.5%), lamb (+5.5%) and aluminium (+4.5%) registered the largest gains.

'SOFT LANDING' SEEN
Barfoots sees the Auckland housing market 'turning'. The sales results for Auckland's dominant real estate agency says both average and median prices dropped in November, but the market is 'well positioned to achieve a soft landing'. Barfoots' number of available listings is now at its highest level for nearly four years.

NAIT RORTERS FINED
Four current or former employees of PGG Wrightson and one former employee of Elders Rural Holdings Limited have been ordered to pay penalties totaling $105,000 following an Auckland High Court penalty hearing for their respective roles in a price fixing agreement in connection with the introduction of the National Animal Identification and Tracing Act 2012 (NAIT Act).

HEARTLAND BANK CFO LEAVING
Heartland Bank says its chief financial officer Simon Owen will leave the bank at the end of February next year. Owen has been at Heartland, and Marac Finance, for more than 13 years. Chief Operating Officer Laura Byrne will run a search for Owen’s replacement, who Heartland says will need a "proven ability to lead in an environment characterised by disruption and innovation." For his part Owen says he's looking forward to some time off and will then look at new opportunities.

HARMONEY FINED $292K FOR MISLEADING MARKETING
Peer-to-peer lender Harmoney has been fined $292,000 in the Auckland District Court for misleading consumers into believing they had been pre-approved for a personal loan. The fine comes after the Commerce Commission filed six charges against Harmoney under the Fair Trading Act.

SETTING THE STANDARDS?
Productivity in Australia is improving. And job ads in Australia are rising.

RATES RISING IN AUSSIE TOO
National Australia Bank has hiked interest rates for property investors, the latest in a series of recent pricing increases by major lenders to offset pressure on profits. Meanwhile, Westpac today also raised interest-only rates for investors and owner-occupiers by +8 basis points, citing the need to maintain “prudent lending practices”. Last week, Commonwealth Bank raised a range of fixed mortgage rates, following similar moves by Westpac. NAB’s online subsidiary UBank also lifted variable home loan rates by +10 basis points, while junior lender ME also raised rates for new customers by up to +15 basis points.

WHOLESALE RATES FALL SHARPLY
Swap rates have fallen today as quickly as they rose at the end of last week. The two year is down -3 bps, the five year is down -6 bps, and the ten year is down -8 bps. These moves follow a slip on Wall Street at the end of last week, and were not helped by the Key resignation. The 90-day bank bill is unchanged at 2.04%.

NZ DOLLAR SLIPS A BIT
The Kiwi dollar has fallen as well, more directly influenced by the Key resignation and is now at 70.8 USc. On the cross rates it is at 95.2 AUc, and is at 66.9 euro cents. The TWI-5 now at 76.7. You would have to say this is a very minor reaction in the circumstances. Check our real-time charts here.

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46 Comments

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There's only 1 News today for NZ ...

Not withstanding our own little bit of excitement, I think that in the bigger picture, the demise of Italy's Renzie is probably the most significant thing to happen today. In light of this and everything else that is happening, the EU needs to have a very serious review of it's self with a view to some serious reforms and dismantling of the common currency.

Yes, well, here's to believing in impossible things! Reform the EU? These ossified bureaucratic empires just dissolve away eventually (where is the Austrian Empire today, or the Ottoman, or the British). Hopefully to be replaced by something much more democratic. Viva Italia.

I don't think that there could ever be anything truly democratic about a political entity that large. Democracy is always going to be diluted the more distance there is between the demos and the political class. The citizens of the EU barely bother to vote for their MEP's.
It is important that nation states cooperate and seek union to achieve common goals but the EU is not the only route to achieving that.

You are probably right and if it weren't so serious, its mildly amusing watching their indigence at the forces that are seeking to change their cosy sense of entitlement. However, they can get as indignant as they like because the people will have the final word as we are witnessing.

The BBC front page doesn't even mention JK resignation. It's not even on their World page. But it is at the top of their Asia page.

I understand why NZ wants to feel that their politics has international ramifications but it really doesn't. The world has bigger fish to fry and NZ is barely a blip on the radar. Which, is awesome. Keep a low profile in this crazy world.

BBC mentions John Key when I go here:
http://www.bbc.com/
I'd call that the front page.

Actually Gingerninja is right, it's the Italian PM resignation that gets top billing, John is relegated to the Asia news section underneath. http://www.bbc.com/news/world-europe-38204189

It's a weird comment though. John Key's face is right there when you go to the BBC web page. And I don't think anyone at all was suggesting that this was monumental world news anyway.
I will admit I was surprised that the BBC were hardly covering it and so I went and had a look and whoa there's his face right on the computer screen.
Could be tailoring for my location. I will try Tor and see what happens.
Nope, went there from Moldova and Key is still on the main page....
And Sweden..
And the US...

What's with it being in the Asia section...typical fake news site!

Yes it's in the news section but under BBC Asia news. You can even see it in the url. Just for you Zachary here you go: http://www.bbc.com/news/world-asia-38204424

All I'm pointing out is that Mr Key isn't as big a news story as Mr Renzi's resignation, but at least he had a reason to quit where Mr Key's reason will probably come out in the wash some time down the line, perhaps closer to election time.

Yeah but gingerninja, refugee from the North, who washed up on our fair shore, was trying to burst our bubble, rain on our parade and belittle us. Mspace's screenshot below is pretty damning. Bigger news than Trump&Taiwan and Italy..actually.

Geolocation

Nope....see above.

If I go to http://www.bbc.com/news (which is where you get auto redirected from news.bbc.co.uk) then I get John Key top of page. Picture here : http://www.picpaste.com/Sn0E2qj3.png.

, the top story now is the Italian PM resigning. How quick you go to tomorrows fish and chip paper.
pity his flag failed most PM's leave with a legacy policy or monument in place
Anderson = kiwibank Clark = WFF and Student free loans Cullen= super fund and kiwisaver
Muldoon thing big, douglas GST lange nuclear free

It is in the centre of the page. That must mean something!

It's not on Drudge though....

yep where you put the fish

interest rate rises all over he place, not going to be a good year next year for the indebted

So glad that I held off buying that extra investment property ;)

You should have taken at least one of the table and retired some debt CJ. Too much uncertainty in the market. More factors in favour of property prices in Auckland pulling back than factors to raise them. Markets hate uncertainty and with Key resigning it increases the risk of a left wing government who will help FHBers.

Yes that's why I held off from buying when prices are high. There are so many indicators now that property prices are sure to drop, it's just a case of how fast and by how much?

When will you consider buying?

Humm.. Well that's a tough question. I'd prefer to buy in Auckland due to being closer to home and a kind of viable market, though I did consider Wellington but the latest large quake put me off. I'm estimating holding off for at least six months, I've already waited a year since I sold my last rental property, I could tell that something had to give in the current market.

It will be interesting to see what happens when the NZ (Oz) banks lift the LVR restrictions. I recon there won't be much change and the market will still take a downward trend. The big one to watch is China of course.

And possibly the sharemarket; fell 0.7% after the PM's resignation.

Former currency trader short changed by key currency markets as NZD yawns

The interest rate rises are minimal.
They are only for the longer term and the shorter term under 2 years are only going to affect first home buyers.
Most people are already fixed in the 5s and when they come off their rate will be less as it will be in the 4s.
Rates are not going to rise by much despite many hoping they will,for some strange reason as it affects everyone who is indebted.

How do you know.......

The market doesn't care - talk about wishful thinking....

Nymad, as I say the rises are a pittance and barely worth a mention?
The United States mortgage rates are approx. 3.6 per cent fixed for 15 years.
There has been talk about rising rates in U.S. for years and nothing really.
The States can't afford to have high rates and yes there may well be small rises over the next year or so due to the new President but they are only going to be minimal.
What happened to the 9 per cent rates that many were tipping to be several years ago and the 40 per cent house price drops when the total,opposite happened as we all know.
Look the market will take care of itself, world events are what effects the market.
If economists were accurate with their predictions they wouldn't need to be economists as they could make mega dollars because they knew which way the NZD was going, house prices, sharemarkets etc. but as we know they all are just guessing and not many agree with each other do they?
New Zealand manufacturers, farmers or anyone in business won't want higher interest rates as they may well be forced to cut costs which includes laying off staff, so be very careful with what you wish for!

Yes, but the american dynamic is very different to NZ.
Not to mention that the federal rate and QE has a long way to go to equalise with 3.6%. NZ has essentially hit rock bottom market rates, so funding costs can only go up. It would not take much action from the states to trigger this in NZ. Our forward curves are already suggesting this.

You seem to agree that the market will take care of itself, so how could you be so naive as to say that interest rates will not rise? But, then of course you go and say that businesses won't want higher rates, so they won't increase..
Which one is it?

Nymad, never said that interest rates won't rise.
They have only gone up by a miniscule amount so far but can't see fixed rates go over 6 per cent again.
May be wrong but don't think I will be!
Business don't want to see high interest rates as they will cut costs including job losses, and that is why I can't understand why many on here wish that rates go high again.

Property market is falling off a cliff....but falling of a cliff can go unnoticed for some time. One can actually get some nice views during the fall, can be an enjoyable time. The problem only comes evident when you realise the little bit right at the bottom is the bit that does the damage. Happy landing...

But relying on something you don't control to remain the same is remarkably naive. You say you can not rely on economists predictions - what makes you so special that we should believe what you say - who put you on a pedestal. People may not want things to change but New Zealand is insignificant in the world economy.

As has been pointed out before those small increases in interest rates can have a significant effect on the interest people are paying due to the amount they have borrowed.

Bad Robot, of course I have got no control over world events or what happens to interest rates whether they go up and down.
The reality is the so called experts are so wrong so often, that you certainly wouldn't bet anything on it.
Take the Fonterra milk price for instance.
Some Banks were saying the next year to be around $4 and yet the ASB Bank was saying $6 so an additional 50 per cent higher, so who would you believe?
Everyone is allowed to predict anything and at the end of the day they will be right or wrong.
Personally back my opinion based on past record and experience and has worked for me in the past.
If interest rates did go up dramatically then property will certainly drop in price in Auckland but nothing surer is that it will be even harder for young ones to buy property in Auckland.

That is the whole point we have absolutely no idea - you pays your money and you takes your chance....

Experience is good when things are repeatable and certain but as uncertainty increases ( and it is increasing in the world) - experience counts for less.

Nymad any increase in residential lending rates sends a signal to the market no matter how small the increases are. At worst it means the party is over, at best it means the bar is getting low on alcohol supplies. On top of the recent increases in interest rates (which occurred after a drop in the OCR by the way) there are a number of other risk factors creeping into our housing market. The Chinese government has made it harder to get money out of the country. Notwithstanding the US stock markets are at record highs there are some political risks creeping into the world such as the Brexit and Trump suprises and today we have Italy deciding it will look at its future relationship with the EU. In NZ we have had some bad earthquakes and we certainly do not want any more. They create havoc for the Insurance Industry and insurance premiums spike which affects us all. And today we have the added risk of the possibility of a left leaning government next year. I do not think it will happen but if it does look to the new government bringing in measures to help the FHBers. Overall I would have to say there is more chance of the housing market in NZ correcting in some way than it going up currrently. Time to take some debt of the table and sit back and see where it goes. An astute investor will do that and look to buy back in the future when it turns around again.

"An astute investor will do that and look to buy back in the future when it turns around again"
Haha. Why should housing investment bounce back to become be a nice little earner again? Is there some law of the land which requires that this to be the case? Once capital gains do not occur, surely the paltry rental income that is payable at the moment (minus rates etc) for new purchases, will in no way be sufficient for "investors" to even consider for one second the purchase of a property?

An astute housing investor with positively geared property would not be repaying debt, they would be looking to buy further positively geared property at a good price.
Interest rates are not dramatically going to rise in the next few years.

Are you putting your money where your mouth is?

Sorry, I've missed something. If they aren't paying back debt, how are they financing?

"Interest rates are not dramatically going to rise in the next few years."
The point you are missing is that they don't have to rise dramatically. In the case of Auckland where mortgages of $500k are commonplace, a 100 basis point rise (less than 25%) would lead to an increase of around $5k p.a. in repayment requirements.
In the case of any investor, where do they get the cash from? It's not as if they can recover it from rent if rental inflation is non existent..
In the case of many homeowners, such an increase would be a strain on the finances..

So, what happens in this instance?

Nymad, I think many on here think that Auckland is the only place in New Zealand that exists.
Take the glasses off and you will realise that Auckland is not the only place that people live in.
I think you will find that there are property investors that live outside Auckland that are getting excellent returns and their property is appreciating without next to no downside, as full time investors have bought with positive returns from day one.
Please Gordon, don't come on and rubbish Christchurch again as you normally do!

Let's wait and see what the Reinz November report tells us. Appreciating????

Chch average and median badly skewed by the sales of heaps of "as is where is" property.
Of course market is quieter nationwide due to the ridiculous LVR requirement that the Reserve Bank brought in requiringat 40 per cent deposit for investment property.

It is not the 40 per cent deposit that investors have to put in on property being purchased but the fact that all other security the Banks hold for previous purchases have also been altered so that those properties security has been altered to requiring the 40 per cent as well.
First home buyers are also struggling with the increase to 20 per cent from 10 per cent that they were able put down.

I am amazed that property spruikers like yourself expected the RB to allow property inflation to run forever. Now you are facing even stronger measures as JK has gone. Housing is just another market and when it falls it can fall hard and the process to sell is not always quick and easy. Take some money off the table.

It seems to me you are the exact opposite of a spruiker gordon. Why do you advise The Man 2 to do anything? Surely it is not out of concern for his personal wealth. No, you want everyone to try and sell at once so the market gets flooded and prices crash. Then you can post a comment and claim, look I was finally right (after being humiliatingly wrong about everything before).
The Man 2 is not going to sell as his investments are positively geared. He'll just hang on like we always do.

Does this mean the Reserve Bank is now allowed to introduce Loan to Income ratios ?

Lots of uncertainty ahead with a good chance of a change of government. Lets hope for
15% Vancouver Tax on Non Citizen buyers
Loan to Income Ratios 4 to 1

Make NZ houses our homes again

And before someone says that the Vancouver Tax doesn't work the evidence is mounting that it does

https://www.bloomberg.com/news/articles/2016-12-04/vancouver-housing-tax...