A review of things you need to know before you go home on Tuesday; home loan affordability updates, housing confidence bounces back, Kiwibank likes the outlook, swaps unchanged, NZD firmer

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

MORTGAGE RATE CHANGES
No changes to report today.

TERM DEPOSIT RATE CHANGES
None here either.

HOME LOAN AFFORDABILITY MOVING
The national home loan affordability measures are unchanged in April from March. But there are some notable regional movements. In Auckland, it now takes 43% of household take-home pay to pay the mortgage on a lower quartile house, down from 46% a year ago. (On Auckland's North Shore, it is down to 51% from 56% a year ago). Only Taranaki and Canterbury had affordability improvements for first home buyers in the past year. Northland and Waikato were little changed. All other regions posted minor tightening. But there is significant deterioration in affordability happening in Rotorua, the Kapiti Coast, Nelson, and the Auckland zone around Rodney. However, all are still 'affordable', except in Rodney.

HOUSING MARKET CONFIDENCE BOUNCES BACK
The ASB Housing Confidence Survey finds expectations in the housing market have improved sharply after a post-election slump, and Auckland house price expectations have hit a 12-month high.

FITCH AFFIRMS BIG 4 BANKS' CREDIT RATINGS
Fitch Ratings has affirmed the credit ratings of New Zealand's four major banks. ANZ NZ, BNZ and Westpac NZ have AA- ratings with stable outlooks. ASB has an AA- rating with a negative outlook. ASB's outlook reflects rating action Fitch took on May 6 on ASB's parent, Commonwealth Bank of Australia, to reflect CBA's risk in remediating shortcomings in its operational risk controls and governance.

AUSSIE COMMUTING HABITS
In Australia, they released some interesting travel commute data from their 2016 Census. It seems the average commute is 16 kms. Men commute longer than women. Generally, as income rises so does people’s average commuting distances. People with a weekly income of AU$2,000-$2,999 traveled the longest average distance to work (20.0 km), while people with a weekly income of AU$1-$149 had the shortest average distance to work (9.6 km). Of the 9.2 million commuters on Census day, 79% traveled to work by private vehicle, 14% took public transport and 5.2% either cycled or walked. In addition to those who commuted on Census day, a further 0.5 million reported that they worked from home, and 1 million employed persons did not go to work on that day.

MAKING BANKERS RESPONSIBLE WHEN SMEs FAIL
In Australia, the Financial Services Royal Commission is rolling on, looking at bank lending to small businesses. The core line of inquiry seems to be that banks have a duty to ferret out bad business plans and not lend on them, even if they have adequate security. The hearings continue with a stream of witnesses whose business failed blaming their bankers.

'FINE AND PARTY CLOUDY'
Kiwibank economists like what they see when looking at the New Zealand economy. In a review out today, they say: "Global growth has improved, led by developed nations. Trade wars represent the biggest threat. Locally, the Kiwi economy is in a bit of a sweet spot. Growth is close to trend, the fiscal position is strong, and interest rates are low. Inflation, particularly foreign inflation, is weak. Wage inflation is the key, and likely to strengthen. With Kiwi interest rates expected to stay well below US rates, the Kiwi dollar can provide some support."

DON'T MENTION THE DEFICITS
Keep an eye on Turkey. Things are getting dire, economically. They owe US$400 bln plus in debt, but their currency is/has collapsed, falling sharply again today. They have no way to service that debt. Locally, 42% of voters surveyed think it is all part of a plot to undermine the country. Apparently they blame "George Soros", the current Turkish method of blaming the Jews for this financial mess. There is an election on June 24. Rising debt and fast rising deficit spending are apparently nothing to do with evaporating confidence the Turkish economy is on a sustainable path.

BENCHMARK INTEREST RATES SOFT
Local swap rates are little changed today, with only a -1 bps slip for durations of four years and longer. The UST 10yr yield has also slipped -1 bp to 3.05% today. The Aussie Govt 10 yr is still at 2.87% (unchanged). The China 10 yr is at 3.68%, down -4 bps. And the NZ Govt 10 yr is down another -2 bps at 2.84%. The 90 day bank bill rate is unchanged at 1.98%.

BITCOIN ALSO SOFT
The bitcoin price is now at US$8,294 which is down -2.1% from this time yesterday.

NZ DOLLAR FIRMER
However, the NZD is firmer at 69.5 USc. We are little changed against the Aussie at 91.6 AUc, and up slightly against the euro at 59 euro cents. That has the TWI-5 at 72.3.

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