Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No changes to report.
TERM DEPOSIT RATE CHANGES
No changes today.
LOWER LATE PENALTY
ACC is required to pay interest on weekly compensation claims that are late because of their processing. That rate has been reduced from 5% pa to 4.245%.
IMPROVING TREND
Home loan affordability was at its best-ever level in Christchurch in June for first home buyers. And it is improving in Auckland. These are the key findings in the latest interest.co.nz homeloan affordability reports which measure the relationship between household take-home pay and the mortgage payment required for a first quartile (FHB) house. In Christchurch, that lower quartile house price is now $345,000 (its lowest in nearly three years), in Wellington it is $590,000 (a record high), while in Auckland it is $656,200 and -5% lower than its peak in March 2017. In Auckland, those lower quartile prices range from $795,000 on the North Shore to $576,000 in Papakura. Amassing the deposit for a purchase is still a challenge, but not insurmountable for a double income household earning median incomes in the 25-29 age group.
BIGGER GOODS DEFICIT
The annual trade deficit in goods for the year to June 2018 was -$4.0 bln*, the largest annual goods deficit since 2008. The June-alone result was a -$113 mln deficit, and a big miss from the market expectation of a +$200 mln surplus. A risee in the import cost of crude oil and other petroleum products was behind the slump. Imports in June 2018 were almost +13% higher than the same month a year earlier, while exports only rose by +4.6% on that basis. In the year, more than 25% of our exports now go to China (and Hong Kong). Australia is second, taking just 16%. Our largest import source is also China (19% of all imports), followed by Australia (12%). (*=including aircraft and ships of $0.5 bln.) New Zealand runs a services surplus.
NEW HEAD OF HOME LOAN PROVIDER
NZ Home Loans, a franchising subsidiary of Kiwi Group Holdings (same parent company as Kiwibank) has appointed their acting CEO, Aaron Skilton, permanently to the role.
NEW HEAD OF KIWIBANK'S BROKER CHANNEL
NZ Home Loans, the broker franchising subsidiary of Kiwi Group Holdings (Kiwibank), has appointed their acting CEO, Aaron Skilton, permanently to the role.
MORE HOME LOAN INTEREST
In the year to June, mortgage borrowers paid $11.8 bln in interest on their liabilities, up +5.7% over the year to June 2017. And that is despite only drawing down $67.3 bln on new loans which was -$5.0 bln less than in the prior year. Fewer loans were paid back in full (possibly due to slower house sale transactions), and smaller voluntary excess repayments were made. The market may have slowed, but the banks 'won' on this change anyway.
OUT OF FAVOUR
Updated: June 2018 home lending was +4% higher than for June 2017. But it is seriously lower than two years ago. Most of that two year fall was for investors because lending to these clients halved. Lending to first home buyers actually rose although the value of the rise was just +$90 mln for June 2018 compared to June 2017. More details here.
AUSSIE INFLATION UP
In Australia, their CPI inflation for the twelve months to June revealed a rise of +2.1%. Markets had expected +2.2%, but the result was still higher than the +1.9% in the year to March. There were some particularly steep rises in Melbourne, Adelaide and Canberra, but much more muted changes in Brisbane and Perth. There were also some particularly steep rises for energy; electricity was up +10.4%, gas was up +7.1%, and petrol was up +16.3% pa. Childcare was up +6.0% pa. Their exchange rate wobbled on the news, but when it was understood, reverted to its prior general level, although -20 bps weaker.
SWAP RATES UNCHANGED
Local swap rates are unchanged today, and that is a rarity. This is following the UST 10yr which has slipped to 2.93%, a -2 bps dip. The Aussie Govt 10yr is at 2.71, also down -1 bp, the China Govt 10yr is at 3.56% unchanged, while the NZ Govt 10 yr is at 2.85%, down -1 bp as well. The 90 day bank bill rate is down -1 bp to 1.91%.
BITCOIN LEAPS
The bitcoin price is now at US$8,421, up strongly again, this time by another +8.7% in the past day.
NZD UNCHANGED
The NZD is little changed at 67.9 USc. And it is holding on the cross rates at 91.8 AUc, and the euro at 58.1 euro cents. That puts the TWI-5 basically unchanged at 71.3.
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12 Comments
It’s a parking place while I wait for a clear sign where everything is going. I’m not interested in housing anyone but immediate family and would buy to secure property for my children, if there was a collapse, but it has to be in 1071. Other thought is private equity, but again I want to buy in when cash is King. Very frustrating right now. I think the COL is increasing the parasitic load on the economy but it was so strong before they got in that it’s taking a long time to succumb.
In other news, even the Immigration department isn’t benefitting from record high migration. They are fretting over a nominal hike in work visa charges. You know the quality of potential incoming workers is abysmal when you fear that those deciding will see an extra $210 or so as a major hindrance to their migration plans.
https://amp.rnz.co.nz/article/e4328857-69fc-4374-a004-41c53f31449f
Stamping out worker exploitation has to have priority over cheap skate businesses that worry about an extra $210. Besides when I worked abroad in a 3rd world country the cost of my work visa was equivalent to the annual pay for two teachers. Note my employer had a real incentive to find/train locals to replace me and that is how it should be.
Worker exploitation will stop with higher standards on visa issuance. Currently, the essential skills visa threshold income is about 43k. Unless this amount goes up to liveable rates, nothing will change.
Employers save tens of thousands of dollars in salaries and PAYE by hiring vulnerable migrants, under-reporting their hours worked and paying them under in cash under the table. Even a few thousand dollars increase in visa fees won’t help reduce exploitation, which clearly promises larger financial gains.
Should not be difficult to match IRD database with INZ residents visa database - it would reveal who earns little and that is where the exploitation occurs not to mention those immigrants prosecuted for importing drugs - 9 years of residency and no IRD return!
The only reason for not doing so is it will reveal the extent of our low wage immigration.
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