What happened Wednesday

A review of things you need to know before you go home Wednesday; no rate changes, online job ads up, visitor numbers grow, peak migrant, dairy downside, blockchain review; swaps soft, NZD up

22nd Nov 17, 3:59pm by David Chaston

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

MORTGAGE RATE CHANGES
No changes to report here today.

DEPOSIT RATE CHANGES
No changes here either.

BACK ON TRACK
A sharp bounce-back in October in Auckland has returned the MBIE's online job index back to the trend we have seen all year, apart from September. The real strength however is for unskilled and semi-skilled workers. The skilled category is flat. It is also notable how the Christchurch online job ad levels continue to decline - but those for the rest of the South Island are rising strongly. Regional North Island is not doing badly either.

MORE KOREANS, CHINESE, FEWER AUSSIES
The tourism sector gained momentum last month, with tourist arrivals up +3.9% from the same month last year to 270,500 in October 2017. The trends of previous months remained the same, with stronger growth in the number of Chinese visitors (up +12.5%) offsetting weaker growth in Australian arrivals (-3.0%). There was also a huge jump in visitors from Korea, by +3,088 or +52% from October 2016

OFF THE BOIL
Infometrics: Annual net migration continued to pull back from July’s peak and reached a 10-month low of 70,694 in October. Fewer people are coming here on resident visas compared to a year ago, while the number of foreign students arriving has plateaued at about 4,000 people below its early-2016 high. Although previous rule changes are already pulling net migration down, further changes by the new government will accelerate this process next year.

'HAS TO BE CUT'
Today's dairy auction has compounded the downward trend for dairy prices - they are now down -10% in the last four auction events - and analysts are growing doubtful that the previously signaled payout levels can be achieved for the 2017/18 season. ANZ economists are expecting Fonterra to drop milk its forecast next month from the current $6.75 to possibly as low as $6.25.

NOT-SO-FUNNY MONEY
The RBNZ has been looking at 'distributed ledgers' (blockchain) - and in a bit of detail too. They are trying to increase public understanding of the technology, highlight some of the risks involved in using cryptocurrencies, and look at some of the potential implications of these technologies for consumers, financial systems, monetary policy and financial regulation. If you don't need to read their whole 44 pages, we have a review here.

LOWE BAFFLED
Australia has entered an uncertain chapter of its economic history, the RBA governor has declared. And a key issue is how to get wages rising again. It may be more than monetary policy can fix.

MARKING TIME
Residential construction completed in Australia in the year to September was up +1.4% but that hides the fact that renos and additions to residential property was down -4.1%. Take out inflation from this data and there is a small slippage. The residential sector was the only one going backwards however; non-residential and engineering sectors are expanding strongly.

WHOLESALE RATES SOFT
Swap rates fell by -1 bp today across the board from 2 - 10 years. The 90 day bank bill rate is unchanged at 1.92%.

NZ DOLLAR FIRMS, BITCOIN AT ANOTHER RECORD
The NZ dollar has inched up today to 68.4 USc. On the cross rates we are at 90.3 AUc and at 58.3 euro cents. The TWI-5 is now at 71.5. But the bitcoin price is taking a breather, holding just under US$8,100.

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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18 Comments

by RickStrauss | 22nd Nov 17, 4:21pm 1511320910

And another hundred Auckland houses went on TradeMe.

by Retired-Poppy | 22nd Nov 17, 4:36pm 1511321776

...if all these houses don't sell soon the'll be some toys being chucked!

by Foyle | 22nd Nov 17, 5:30pm 1511325055

12062 right now in Auckland, basically same as a few days back. Think we have pretty much topped out for the time being - though that means about 2.5% of ~500k Auckland region houses are now on the market, which must be an all time record.

by RickStrauss | 22nd Nov 17, 5:41pm 1511325689

That's around 50 less than when I commented. Must be some rollover, perhaps. I was not seeking to misrepresent the facts.

I recall last Friday/Saturday it just ticking over 12,000 for the first time, and this morning when I had a browse it was just over 12,000, hence my surprise at seeing it 100 more this afternoon.

by David Chaston | 22nd Nov 17, 7:22pm 1511331726

Not even close to a record. Our data shows the total Auckland listings on Trademe in the w/e 21-Apr-08 was 19,238.

by gingerninja | 22nd Nov 17, 7:59pm 1511333971

David Chaston, Wellington is now over 700, do you have records for what is normal or exceptional for this housing market?

by Fritz | 22nd Nov 17, 8:26pm 1511335599

2227 in Wellington region. On a per capita basis, that seems very low given that Wellington is one third of Auckland's population yet the listings are one fifth / one sixth the level

by Fritz | 22nd Nov 17, 8:22pm 1511335327

Yeah, it was wake of GFC and mezzanine finance collapse, with high interest rates...that tipped things
Would be interesting to know how many of those 19,238 were 1/2 bedroom dwellings. I imagine a significantly higher proportion than the 12,000 dwellings currently on TradeMe. If I recall a lot of CBD apartments were dumped on the market

by custard | 22nd Nov 17, 5:09pm 1511323768

Quick question – can someone help?
If a property investor has a few properties financed through a lending institution – are they normally bundled joint and severally for secularisation purposes – and if so, can such an institution appropriate funds garnered from a voluntary sale and offset them against remaining loans in a manner in which they see fit – this being on even though all loan payments are up to date etc – I assume in a slow down the bank may feel no longer comfortable with the current LVR and may act in its own best interests – and being a bank it’s those interests that ultimately count.
Even if they can – is this done widely or only in extreme situations.
And even if all loan payments are up to date – is there some sort of predetermined LVR that if the portfolio falls below, can the bank request / demand a top up.
No hidden agenda – I’m just curious – Thanks.

by MisterB | 22nd Nov 17, 9:21pm 1511338901

Most banks will not release the one security unless they are comfortable with the equity and servicing on the remaining. Probably depends very heavily on the specifics.

by TainuiBabe | 22nd Nov 17, 10:11pm 1511341883

In my experience as an ex-banker, lending policies change to fit in with the "current climate" and recently our banks have experienced an increase of external pressure to raise capital requirements from both our own Rerserve Bank and the RBA equivalent in Australia. So while it isn't "normal practice" during normal business cycles, we have experienced somewhat of a speculators paradise which always makes the banks nervous and as a result, many investors and FHB's are having their loans declined because of uncertainty. Any market that rises so fast makes banks nervous and they pull back on funding. The LVR restrictions imposed by the RBNZ has just amplified it. So the short answer is "Yes" your bank can re-negotiate your terms of lending across all platforms on ALL of your loan portfolio's at any time AND it is written into the fine print of your "Loan Agreement" when you signed it. People need to remember that, until you own your property freehold, your bank is YOUR LANDLORD.

by custard | 22nd Nov 17, 10:32pm 1511343176

Thank you both for your replies.

by Kate | 22nd Nov 17, 10:54pm 1511344471

That situation was reported on yesterday;

https://www.stuff.co.nz/business/property/98994461/lvr-restrictions-con…

by custard | 22nd Nov 17, 11:10pm 1511345423

Well, goodness me - thank you so much Kate!
I wonder if this is widely understood - interesting times indeed - hhmmm!!

by CN | 23rd Nov 17, 3:38pm 1511404703

TainuiBabe, I understand that the banks classify residential property investor borrowers as
1) retail property investors - not subject to regular reviews
2) business customers - they are subject to debt covenants such as LVR and interest coverage ratios, and regular reviews
3) commercial - they are subject to debt covenants such as LVR and interest coverage ratio, and regular reviews

If residential property prices fell,
1) at what level LVR would the banks start to request additional collateral for each of the above classification type of borrower?
2) would the banks request additional collateral even if the loan was P&I (i.e not interest only), and was current on their payments - or would this only apply to interest only loans and drawn credit lines?

by CN | 23rd Nov 17, 6:16pm 1511414190

Can someone help? what happens if a property investor has a few properties financed with a non bank lender? If property prices fall, and the LVR rises - at what level of LVR will the non bank lender require a top up or additional collateral?

by Stephen Hulme | 22nd Nov 17, 5:35pm 1511325331

Australia has entered an uncertain chapter of its economic history, the RBA governor has declared. And a key issue is how to get wages rising again. It may be more than monetary policy can fix.

Exactly.

First Bernanke, now Yellen. As I wrote earlier today, there is a growing tendency to revise economic history at least as it applies to official actions. Ben Bernanke defends QE from the perspective of 2009 forward, as if 2008 was all just someone else’s problem irrelevant to the world that came after. In effectively resigning from the Fed Chair position as she did yesterday, Janet Yellen assumes judgement from the same Year Zero:

The economy has produced 17 million jobs, on net, over the past eight years and, by most metrics, is close to achieving the Federal Reserve’s statutory objectives of maximum employment and price stability.

That’s true. Between October 2009 and October 2017, a term of eight years, the BLS’s Establishment Survey figures a positive difference of 16.96 million payrolls. If, however, we judge the Fed’s performance from the prior peak, as is appropriate, the record is cut in half, only +8.58 million net gained. In terms of full-time employment, the “growth” is worse still, just +4.8 million despite 22.8 million added into the prospective labor pool (Civilian Non-Institutional Population) over that time.

If you measure it only from the bottom we don’t look so bad” isn’t exactly a happy retirement sendoff. Yellen also uses another weasel word prominently in just that one sentence. After all this time and effort, the economy is still only “close” to where the Fed thinks it should be. How can this be? Read more

by Andrewj | 22nd Nov 17, 6:55pm 1511330114

perhaps the remedy is to reduce costs?

"the politicization of public services, corruption that evades the legal definition of corruption, self-enriching guilds, cartels and elites and gross incompetence enabled by zero accountability."

http://www.oftwominds.com/blognov17/lower-costs11-17.html