A review of things you need to know before you go home on Tuesday; BNZ raises rates, including its floating rate, online retail spending grows, bigger trade deficit, more debt, swaps rise slightly

A review of things you need to know before you go home on Tuesday; BNZ raises rates, including its floating rate, online retail spending grows, bigger trade deficit, more debt, swaps rise slightly

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

MORTGAGE RATE CHANGES
BNZ has raised its Total Money floating rate by +11 bps today. They also raised their revolving credit rates by +10 bps. Heartland raised their reverse equity interest arte to 7.70%.

DEPOSIT RATE CHANGES
BNZ has raised its 2-5 year term deposit rates from +10 to +15 bps.

RECORD DRUG SEIZURES
There has been a but of talk lately from politicians about drugs. Here are some stats: Customs made 4,165 seizures in 2016, including over 413 kilograms of methamphetamine and 1.1 tonne of its precursors - mainly ephedrine that could have yielded up to 809 kg of meth. These were records.

GLENN GIFTS MORE
Owen Glenn has gifted the University of Auckland Business School $2.6 mln to support innovation and entrepreneurship initiatives at the School and across the University, including a new innovation hub.

ONLLINE SPENDING AT LOCAL SITES SHINES
Total online retail spending by New Zealanders in January was up +16% compared to the previous January. The annual on-line spend is now estimated to be $3.8 bln. This is equivalent to 7.4% of total retail sales for the same period. Excluding the food and liquor sectors estimated online spending is around 10.8% of retail sales. Purchases from offshore online retailers were up +15% on the previous January. Spending at local sites was up +17% on January last year. 

BIGGER TRADE DEFICIT
There was a NZ$285 mln deficit between goods exported and goods imported in January 2017. The recent rises in the value of dairy shows exporters are getting a better price for their milk powder exports than they were at this time last year. China continues to be our top destination for milk powder exports accounting for 32%, followed by the United Arab Emirates, which accounted for 7.6%.

'GALLOP TO A CANTER'
Business confidence eased in February. Other survey indicators were reined in slightly; agriculture dominated but a broader slowing is natural as we enter a mature and capacity-constricted stage in the economic expansion. Survey reporter ANZ said they are not reading too much into the slippage. Inflation expectations continue to nudge up and more firms think the next move for interest rates is up.

CHANGING EMPHASIS
There was a slight slowing in the growth of debt in the local economy in January, although the pullback is pretty minor. The growth in household deposits is also slowing but at a faster rate than for borrowing. Of note however is that consumer debt borrowing (ie non-housing debt) is going the other way, picking up steam - although growth in credit cards and personal loans is still only at half the rate of growth in housing debt.

A BIG IMPROVER
For the second quarter in a row, Australia's current account deficit fell, and quite sharply. It fell by AU$6.3 bln to just 3.9 bln in the December quarter. Australia's net international investment position is a liability of AU$1.0 tln at 31 December 2016, decreasing -2% on the revised 30 September 2016 position. Markets, especially the currency markets, took this improvement in its stride because the result was almost exactly as expected. (From here, a current account surplus is possible in 2017, which would really be quite something unique for Australa.)

WHOLESALE RATES FIRMER
New Zealand wholesale swap rates rose +1 bp for all terms of one to five years, and +2 bps fo terms of seven and ten years. The 90 day bank bill rate is unchanged at 2.00%.

NZ DOLLAR UNCHANGED
The NZD is basically unchanged today and now at 71.9 USc. On the cross rates we are at 93.5 AUc, and at 67.9 euro cents. The TWI-5 index is now at 77.3. Check our real-time charts here.

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

Daily exchange rates

Select chart tabs »

The 'US$' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'AU$' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'TWI' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '¥en' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '¥uan' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '€uro' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'GBP' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'Bitcoin' chart will be drawn here.
Loading...
USD 
NZD
End of day UTC
Source: CoinDesk

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

9 Comments

Comment Filter

Highlight new comments in the last hr(s).

Can't see any justification for raising the floating rate , when the 90 day bill is stable around 2 %. Getting close to a 300 % markup .

But banks don't borrow at the 90 day bill rate for a majority of their funds. The make-up of the each banks borrowing I suspect is a closely guarded "commercial secret" but it will be made up of various borrowing sources. One of those is my mother's estate which still has term deposits ranging from late 4 to mid 5 percent maturing in 2019/20. I'm sure my mother's estate is not the only term deposits that the banks have to still pay interest which is higher than some mortgage interest rates. Banks who borrow overseas I suspect will be price takers not price setters (and overseas banks I'm sure can smell the blood in the water). New Zealand constantly spend more than it earns , we don't save enough to be self funding therefore we are at the mercy of the overseas institutions that will lend to us ( and as DC has mentioned several times in the past few months some of the cheaper sources are no longer able to lend to NZ banks).

Looking at the S8 figures there's bugger all decrease for residential mortgage borrowing and it doesn't seem to correlate with the massive slow down in sales in the Auckland market. I'm wondering how much money has been flowing from offshore directly into Auckland.

On a side note it looks like the weighted average of interest rates have mostly bottomed out so the actual real cost of mortgages for the country will start rising again.

Using some alternative figures Weighted average bottomed in September quarter at 4.61 percent , rising to 4.9 percent December quarter. Will head over 5.0 percent March quarter, when our little nation will be paying an annualised 12 billion in interest alone buying homes from one another.

Who is on floating rates nowadays anyway????
Total Money slight Increase in interest rate!
Seriously, is there a need to advise everyone when it would affect such a small number of borrowers!
Banks are just trying to get customers to fix long term by these Series of very small rises.
You can still,get rates under 4.5 per cent and when many are fixed at over 5 per cent they are going to have reduced costs.

Who indeed.....
http://www.rbnz.govt.nz/statistics/s8

$51bn out of $235bn in mortgage lending. BNZ's share of that might be approaching $10bn at a guess.

These statistics are intersting. 90% of NZ mortgages are either floating or are fixed for less than 2 years term. I think David is right that some of the floating rate likely includes small business lending and equity lines of credit being used to fund family businesses.

It feels like a lot of interest rate exposure over the next two years if rates continue to go up. Some quick math shows that a 1% rate raise on the $183Bn of fixed mortgages as they roll off would cost the average household $1960 per year on a $196,000 mortgage (average of the fixed total by number of fixed mortgages) - fairly manageable. But the folks who took a $600K mortgage on an Auckland house will be out $6,000 per year. If they have expenses go up (kids etc) or someone loses their job it could be ugly. One of the major risks here is some sort of recession. A 1% increase in unemployment would have a huge affect on the ability for the nation to pay this increased level of debt and our closest neighbor and economic ally looks a little wobbly right now....

There is NZ$50+ bln on residential floating rates. But this same rate is the basis for a whole lot of micro and SME lending as well. It will be small business that it affects the most.

Wow. Owen Glenn is a real philanthropist.