A review of things you need to know before you go home on Wednesday; home loan affordability improves, the trade deficit widens, mortgage interest paid rises, repayments fall, swaps unchanged, NZD steady

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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