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A review of things you need to know before you go home on Monday; many rate and cash-back changes, good time to buy a house, consumer spending rises, more bond issues, swaps and NZD on hold, & more

A review of things you need to know before you go home on Monday; many rate and cash-back changes, good time to buy a house, consumer spending rises, more bond issues, swaps and NZD on hold, & more

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

MORTGAGE RATE CHANGES
There have been a number of changes today. ANZ launched a 1 year 3.95% fixed rate, down -20 bps. Kiwibank raised its 2 year rate +10 bps back to 4.29%. BNZ cut its 2 year fixed rate 'special' by -30 bps to 3.99%. None of these represent market-leading rates which are still offered by HSBC Premier and SBS Bank (despite the breathless marketing claims by both ANZ and BNZ, neither of which were true which was disappointing by them, unnecessary, and just reinforces consumer cynicism of banks).

TERM DEPOSIT RATE CHANGES
Kiwibank is now offering a market-leading 3.60% one year term deposit rate. ANZ has trimmed -5 bps from their 2, 3 and 4 year term deposit rates. FE Investments raised their one year and 18 month term deposit rates, both to 5.20%.

A SOLID UNDERCURRENT
The ANZ Monthly Inflation Gauge fell -0.4% month-on-month (up +2.9% year-on-year) in October, kicking Q4 off on a softer note, says ANZ. However, they say they think the headline could be understating the underlying pulse. There was only one area of significant weakness in the Gauge – the recently-volatile accommodation services component – and the number of components to lift in the month hit an 8-year high. Excluding accommodation services, the index lifted +0.3% month-on-month.

DON"T FORGET THE CASH-BACKS
In the mortgage rate change flurry, we shouldn't lose sight of ANZ's push to offer $3,000 cash back on new mortgage deals, under certain conditions. These cash-back deals have been around unadvertised. But first Kiwibank, and now ANZ have made part of their offer overt.

A GOOD TIME TO BUY?
An ASB housing confidence survey has found the fewer people think house prices will rise from here. The survey also shows more think it's a good time to buy.

SPENDING MORE ON CARDS
Electronic card transactions in October were up an impressive +6.4%, but pushed up by a +13% rise for petrol. But there were some other sectors with healthy rises as well. Consumer durables were up +7.6% and services were up +10%. The overall +6.4% rise was the highest gain since April 2016. The petrol rise was the highest since the end of 2013. The average transaction size also rose, its first year-on-year rise for a while.

TOURISM AN INDUSTRY AT SCALE
Nights spent in short-term tourist accommodation set a new record in the year ended September 2018, surpassing 40 mln guest nights for the first time, Stats NZ data revealed today. The big growth is coming from hotels.

BNZ BOND ISSUE SEEKS AT LEAST $100 MILLION
BNZ is seeking to borrow at least $100 mln through a bond offer. The offer of five-year unsecured, unsubordinated fixed rate notes has an indicative margin of 1.00% to 1.05% per annum. BNZ says the bonds will be listed on the NZX Debt Market and are expected to have an AA- S&P credit rating, and an A1 Moody’s rating, equal to BNZ's own ratings. The offer is open for unlimited oversubscriptions.

MORE BOND OFFERS COMING
Christchurch City Holdings Limited is considering an offer of 6 year, unsecured, unsubordinated, fixed rate bonds maturing in November 2024 to New Zealand retail investors and to institutional investors.

BANKS TO DECIDE WHAT IS 'RESPONSIBLE'
In Australia, 'responsible lending' rules are making the banks into arbiters of what is best for you. ANZ is preparing a major overhaul of the way it assesses and checks mortgage loan applications including deep-dive analyses of applicants' income and introduction of sophisticated credit checks. Bank staff and mortgage brokers are being briefed about what to ask at initial interviews, financial documentation required and third-party verification changes that are due to be launched on November 20. Ten borrower options covering downsizers, older employees working past retirement and use of retirement savings to pay-off loans are targeted by the bank with additional requirements. This fallout from their Hayne Royal Commission means that banks will become paternalistic at best, patronising at worst. Customers will blame the banks, but it really is what the regulators will now require of them. Customers, and especially customers with mortgage brokers will be treated with suspicion. Hope this trend doesn't follow here, because the unregulated shadows won't be far behind.

SWAP RATES UNCHANGED
Swap rates are unchanged today from their new higher levels. The UST 10yr yield is also unchanged at 3.19% and seems likely to stay at this level tomorrow because it is a public holiday in the US. Other benchmark bond rates are not as volatile. The Aussie Govt 10yr is at 2.73% (down -2 bps today), the China Govt 10yr is up +1 bp at 3.51%, while the NZ Govt 10 yr is up +1 bp to 2.83%. The 90 day bank bill rate is unchanged at 1.99%.

BITCOIN LITTLE CHANGED
The bitcoin price is at US$6,392, up +1.0% from this morning.

NZD HOLDS
The NZD is unchanged from where it opened this morning at 67.4 USc. On the cross rates we are also holding at 93.2 AU, and at 59.5 euro cent. That puts the TWI-5 at just on 72.

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31 Comments

so consumer spending is on the up ... more debt...

looks like the rbnz is happy with higher debt out there... with its indication of rates being low for longer...

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Yes the RBNZ is delighted that we get deeper into debt. In their strange deluded minds more debt equals more credit which is wonderful. The fact that low interest rates signal low opportunity doesn't seem to occur to them. Low interest rates signal that there are no good places to deploy capital productively in New Zealand. Rather than let this signal have it's effect on our society, the RBNZ in it's wisdom thinks the opposite. So we continue to develop rules that forbid high productivity activities and enable the proliferation of low productivity activity. Sort of kill the productive and enable the parasitic.

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"Low interest rates signal that there are no good places to deploy capital productively....kill the productive and enable the parasitic."
Spot on! And sadly," the RBNZ in its wisdom thinks the opposite" is why we are both here, and where we are off to - a neither of those is good..

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Plenty of people mortgaging their houses to start / support a small business. Is that not productive?

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How much of it are you guessing comes from that?

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The unfortunate part of your comment is the banks want residential property as security against business lending. I have struggled with this for the last 8 years and have succeeded in spite of the banks. I hope to have nothing to do with banks ever if I can avoid them.

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And worse, when they have the security, they still charge extortionate interest rates that makes any small business struggle from the offset.

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I read that guy's book Rich Dad Poor Dad, Kiyosaki I think his name was, and he was saying at the time that you need to borrow as much as possible because you earn more from appreciating assets than you will ever earn from a salary, and so all you need to do is service the maximum amount of debt you can until you sell at some future time and make money (eg NZ property 101). But now he's going around saying, beware the US Dollar and buy gold. Here the RBNZ seems to be working from his first book. Hmmmm, what to do what to do...

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Mr Kiyosaki’s book is almost 20 years old. It is a very simple book to read.. someone with a grade 4 reading abilility could read all the words... The challenge is that most of Australasia only read it in the last 10 years, we’ll after the bubble had already made millionaires of the early participants and debt fools of the rest of them.. and now Mr Kiyosaki calls the bust... what terrific investment advice...

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The great thing about Kiyosaki is that he has many books and you can pick up any one and need not read the rest. They all repeat the same thing in different ways: to make money, business or property.

Gotta credit him for being able to sell many books saying the same thing to an often consistent audience. Good marketer, obviously.

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I read somewhere a while back that he made much more money from his books than he ever did in business. Clearly the implication was that while understanding the theory, putting it into practice with a fickle mistress called "the Market" is an entirely different matter!

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Interesting times, 1 year term deposits 3.6%, 1 year loan 3.99%. Something has to give. 1 year swap now up to 1.99.....

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Correction, 90 day swap

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“BNZ is seeking to borrow at least $100 mln through a bond offer. The offer of five-year unsecured, unsubordinated fixed rate notes has an indicative margin of 1.00% to 1.05% per annum.”

1% per annum! unsecured! Where do I sign up!?!

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​From Stuff today

KiwiBuild is at risk of not having enough buyers that meet its criteria, one analyst says.
The government plan to build 100,000 houses over 10 years has been in the headlines over recent weeks.
First, there was anger that a graduate doctor was among the first buyers.
Then the Wanaka ballot deadline had to be pushed out because there were only 20 entires received for the 10 homes.
READ MORE:
* Kiwibuild at threat of going 'Kiwibust' over 'plummeting popularity'
​* First KiwiBuild families welcomed to new homes by Prime Minister
* KiwiBuild not for low-income families, says housing minister
Now it's been revealed that there are only 338 pre-qualified KiwiBuild applicants, even though contracts for 3375 houses have been signed off by the government.

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Might need to drop the price. Supply and demand etc.

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…or allow to flick the KB houses as soon as one wants as the government has just allowed (had to keep a KB house for 5 years originally)

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Wow, you sure got a bee in your bonnet about that. Don't like it when others get to play the same game as you?

PS, you are also wrong, still require permission to sell within first three years.

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Harcourts chief executive Chris Kennedy has resigned from his role today.

Hes isn't retiring though. Hows that for a vote of confidence for the property market?

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ASB tells us that fewer people think prices will go up & that now is a good time to buy. My version is that house prices will fall further from here and to wait 12 months & they'll be even less than today. I'm picking 10% next year & probably another 10% after that (2020) all going well. Note to self: Or it could get worse (let's hope not).
And about then, the millennials will have nothing to bitch & moan about. 20% less than today will be very good buying indeed. Patience!

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Was the ASB survey purely a survey of it’s existing mortgage customers who have already got themselves into the Ponzi scheme or did they also ask people who haven’t been silly enough to hamstring themselves. Did anyone ask ASB who they surveyed?

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Was the ASB survey purely a survey of it’s existing mortgage customers who have already got themselves into the Ponzi scheme or did they also ask people who haven’t been silly enough to hamstring themselves. Did anyone ask ASB who they surveyed?

Good point. The first questions with any survey research to ask are "who are the respondents" and "what is the methodology."

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With mortgage rates now at 70 year lows, it's a timely warning to be financially prepared for a one in 80 year event. The interest rate buffer to soften the next blow is now disappearing down the gurgler.

What's wrong with completely eliminating debt after such a long debt fuelled run? If you don't, then you're placing way too much faith in Trump!

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Hawkes bay rainfall map, not looking good heading into summer. Stock prices fallen already.

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Just got 20mm, but it's localised.

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As Thomas Jefferson once said: "I believe that banking institutions are more dangerous to our liberties than standing armies." Think about that when you're wearing your poppy next year.

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so does the BNZ bond offer rank higher than a term deposit in terms of an OBR event?

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exactly the same as a term deposit or any regular customer depaosit. Both are "unsecured, unsubordinated". The term is, this is a negative pledge situation; that is they are not outranking regular creditors/depositors.

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