A review of things you need to know before you go home on Wednesday; no rate changes, first homes less affordable, bear market for dairy, good farm sales, more job vacancies, swap rates on hold, NZD slips, & more

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.

LESS AFFORDABLE, NOT UNAFFORDABLE
Today's release of our home loan affordability reports shows that rising house prices have more than offset falling interest rates in 11 of 12 regions over the last six months making home loan affordability for first home buyers a little tougher. That said, such buying is still affordable almost everywhere with the usual suspects (Auckland and Queenstown) still tough. The issue is not so much the mortgage payments, or even the incomes required. The big inhibitor is finding the initial deposit. If you don't have 20% you will likely not get access to 'special' mortgage rates - plus you may get slugged with a "low equity premium". But if you have saved a deposit, most first quartile houses will be affordable for most people on a medium income aged 25-29, in most locations. (But this won't apply to leafy suburbs in inner Auckland. Then again, it never did.)

BEAR MARKET FOR DAIRY PRICES
The dairy auction overnight brought a tough result, compounding the 13 prior declines and taking the full drop to -20% so dairy prices are now in a bear market. It wasn't as fierce for whole link powder however. The rising NZD isn't helping either.

GOOD FARM SALES - FOR AN OCTOBER
Farm sales weren't too bad in October. 100 farms were sold in the month nationally, up from 85 in October 2017, and that compares with 105 sold in October 2016. But only 3 of them were dairy units. October is often a low month for dairy farm sales but the ten year average is 10 in an October month. In addition, 32 finishing units and 37 grazing properties were sold in the month, and there were 13 horticultural sales. Canterbury and the Bay of Plenty did a bit of a starve. Northland and the Manawatu both had good sales activity. More details here. The REINZ said a lot of farms came on to the market in October, so all eyes will be on November results. Typically 180 farms sell in November.

HEALTHY LIFESTYLE BLOCK MARKET
The situation was similar for lifestyle blocks which sold at normal levels in October, and sales were up +10% from the sale month a year ago. Sales in almost all regions were normal to healthy.

MORE JOB VACANCIES
MBIE's online job vacancy report shows vacancy levels pushing on up to new record levels, with skilled vacancies also rising. Over the past year, online vacancies have increased by +9.4%. There remains elevated demand for unskilled positions.

CREDIT CARDS USE RESTRAINED
Credit card balances rose to $7.4 bln, up +5.3% which is the smallest rise in more than a year. The proportion that is interest bearing is now 61.2% and that is near a record low and growing at only +2.9% pa. Still, that is $4.2 bln with a weighted average interest rate of 17.9% - which incidentally only down from 19.7% in 2009 when the OCR was 8.25% and the 90 day bank bill rate was 8.7%. It's is currently 1.75% and 1.99%. There seems little justification, especially with the new availability of positive credit scoring. Domestic billings on credit cards are up only +5.2% pa, overseas billings are up just +2.1%. We seem to be pulling back on using our credit cards.

AGEING IS A DRAG
New research by analysts at the RBNZ suggests our high participation rate will stay high for at least another decade, even longer. Our population has been getting younger recently with the median age down from 37.6 years in 2013 to 36.9 years. But it is expected to turn up in the future. It may turn up faster if the current aversion to migration takes hold. Our current participation rate is a high 70.6% and these researchers find that monetary policy has a small influence on the participation rate, through an "encouraged worker effect". The participation rates of young people and people near retirement age appear the most sensitive to business cycle fluctuations. Until 2035 an ageing population won't hurt participation if women aged 24-54 and people aged 55 stay in the workforce longer, as projected. If these trends don't happen, then we are likely to face increased economic stresses that other countries are facing now.

COLONISING TRADE ME
British private equity firm Apax Partners is making a bid for TradeMe. They are bidding $6.40 per share. Prior to the bid the market price was $5.10 per share. What could possibly go wrong? End of an era I suspect when/if a bunch of foreign wide boy know-all investment bankers from London start managing it to get their money back.

MARKETS FALLING
After the S&P500 fell -1.6% last night, Shanghai is down -0.6% in late morning trade (on top of yesterday's -3.0% fall). The ASX200 is down -0.7%, which the NZX50 is down -0.6% even after the TradeMe spruik.

SWAP RATES HOLD
Wholesale swap rates are generally holding, with a slight softness at the short end, and minor firmness at the long end. The UST 10yr is still at 3.07% but it did come under pressure earlier when Wall Street was open. The 2-10 curve has fallen however to +24 bps. The Aussie Govt 10yr is at 2.71%, up +1 bp today, the China Govt 10yr is up +3 bps at 3.41%, while the NZ Govt 10 yr is at 2.75% and that is up +1 bp. The 90 day bank bill rate is down -1 bp to 1.99%.

BITCOIN DUMPED AGAIN
The bitcoin price is now at US$4,285, another -$500-plus drop and and down -11% in the past 24 hours.

NZD SLIPS
The NZD is -½c lower today at 67.9 USc. The negative dairy auction didn't help, and general market risk aversion counts against the Kiwi dollar. On the cross rates we at 94.1 AU which means the Aussie has been hit a little harder, and at 59.7 euro cents. That puts the TWI-5 at 72.4.

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