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A review of things you need to know before you go home on Friday; ASB cuts rates for mortgages and term deposits, FMA sees trust crisis, wholesale trade jumps, household net worth growth dips, swaps and NZD slip

A review of things you need to know before you go home on Friday; ASB cuts rates for mortgages and term deposits, FMA sees trust crisis, wholesale trade jumps, household net worth growth dips, swaps and NZD slip

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

MORTGAGE RATE CHANGES
ASB (and Sovereign) cut their three and five year fixed rates today by -40 bps. They also announced a KiwiBuild low-deposit offer, and some cash-back.

TERM DEPOSIT RATE CHANGES
ASB also cut some term deposit rates as well.

'A CRISIS IN TRUST'
FMA boss called for financial services firms to stop focusing on shareholders at the expense of customers, with public trust the worst it has been since the GFC, he says.

A STRONG COMPONENT
One of the final elements that goes into our GDP result was announced today. Wholesale trade for the June quarter came in +7.1%, up from +6.0% in the March quarter. That is the best rise for a June quarter since 2011. Driving this result were very good horticultural exports. The actual value of total wholesale trade sales was $26.7 bln in the June 2018 quarter, up +$1.7 bln from the same quarter a year ago.

RENT VARIATIONS
National median rents were unchanged in August. But they fell in Auckland. Median weekly rent for a 3 bedroom house in Auckland fell to $622, and down from $650/week in June. Median weekly rent for a 2 bedroom flat is now $460, down from $475/week in June. Wellington and Christchurch rents are not moving much.

FASTER GAINS
Household disposable annual income was up +5.5% in the year to June according to data released by the RBNZ today. The June quarter household disposable income was up a slightly faster +5.6% compared to the same quarter a year ago. Both rises are faster gains than in the 2016 to 2017 comparative periods.

LOSING STEAM
Household financial assets reached an impressive $877 bln as at June 2018, a rise of +3.1% gain year-on-year. That is down from a gain of +3.4% in the previous year. These financial assets do not include housing. Total financial liabilities (which do include housing loans) reached $215 bln, a +6.4% rise. That means that net financial wealth of households rose just +2.0% to $662 bln. It rose +2.2% in the previous year. There was no update today for the June net equity in housing; that won't come until later in the year.

SOMETHING TO WATCH
Tomorrow most eyes will be on the US non-farm payrolls report. But keep an eye on Asian stock markets. They were down sharply yesterday, and today Tokyo is down another -1%, Hong Kong is down -0.8%, and Shanghai is down -0.1%. Locally, the NZX is down -0.2% and the ASX is down -0.8%. These continuing losses are starting to mount up.

SWAP RATES LOWER
Swap rates are lower by another -1 bp across the board again today. The UST 10yr is down -3 bps at 2.88%. The UST 2-10 curve is now just over +25 bps. The Aussie Govt 10yr is at 2.55% (down -3 bps), the China Govt 10yr is at 3.65% (up +1 bp), while the NZ Govt 10 yr is at 2.56%, down -1 bp. The 90 day bank bill rate is unchanged at 1.90%.

BITCOIN STABLE
The bitcoin price is at US$6,503 up +1% from this time yesterday.

NZD LOWER
The NZD has slipped to 65.8 USc. On the cross rates we are firmer as well at 91.7 AUc, and holding at 56.6 euro cents. That puts the TWI-5 slightly lower at 69.5.

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17 Comments

The standard EOW peek at Gubmint Budget assumptions:

TWI - 71.69, Treasury BEFU assumption 'around 75'
WTI - 67.75 Treasury BEFU assumption 'around 60'

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Australia's Big Banks Raise Mortgage Rates, Sparking Housing Market Fears
https://www.zerohedge.com/news/2018-09-06/australias-big-banks-raise-mo…

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Who fixes their mortgage for more than 18 months?

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That soil moisture map is rubbish . It's rained here last 6 days straight half the farms under water and the other half is slips and still map show green.

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It does seem a bit silly.

The paddocks around here are absolutely flooded, slips everywhere, and it shows green for my location as well. The east coast of the lower north island should be dark blue from the cape south, maybe even to Wellington. Hawkes Bay has more standing water than I've seen in my decade of living here.

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talked to a friend who thinks he's lost over 1000 lambs, been a very difficult week, my flats are all flooded, worst for 15-20 years.

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Gisborne to CHB there is surface water everywhere. Will be 2 weeks before any ground work starts provided no more rain.. Manawatu/Kapiti has had consistent rainfall for 18 months.

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Those are good rent decreases in Auckland. Possibly reflecting that we have fewer int'l students coming in.

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That doesn't help the property "investors" with their investment returns.

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My heart bleeds

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The lucky country has more in common with emerging economies this time around as its financial markets also suffer from a global credit tightening owing to its large bill of foreign borrowings. Similar to central Asian and South American countries, their dominant sector of the economy is commodity extraction, not advanced, innovative industries.

https://www.bloomberg.com/amp/news/articles/2018-09-06/out-of-favor-aus…

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Housing Bubble Pops in Sydney & Melbourne, Australia
And with impeccable timing, an immense flood of new construction.
https://wolfstreet.com/2018/09/03/house-price-condo-bubble-sydney-melbo…

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Bubble? Boil.

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That’s bloody scary.

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From 2016 peak, QV data shows median price drops as follows;

Albany Heights – down 7.74 per cent
Lynfield – down 6.86 per cent
Pinehill – down 5.84 per cent
Waitarua – down 5.54 per cent
Golflands – down 5.53 per cent
New Lynn – down 5.41 per cent
Totara Heights – 5.34 per cent
Flat Bush – down 5.26 per cent
Sunnyhills – down 5.05 per cent
Henderson Valley – down 4.92 per cent

https://www.stuff.co.nz/business/106902193/heres-where-house-prices-are…

And these are not even adjusted for inflation either. What was a surprise to me was that Paihia, is still down almost 9 per cent from 2007. Prices have recovered 12.4% since April 2016!

Foreign based buyers ban together with fallout from mounting global risk is setting the stage for a broader based declines for sure.

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Q.V. figures show Auckland East is up 6.2% since August 2016. How’s your area doing Poppy? Not surprised about Paihia based on the stories about random violence with king hits and multiple boots to the head. I think you’d want to be in a gated community if you lived up there

Btw I see Nic Johnson is a Stuff comment writer.

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Always seems tricky naming a suburb Something-or-other Heights. Like it's predestined to be underwhelming in the future.

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