A review of things you need to know before you go home on Friday; key rate changes, building consents rise, RBNZ to get tough on bank capital, consumer confidence average, business borrowing sags, swaps down, NZD firm & more

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

MORTGAGE RATE CHANGES
Both BNZ and Westpac backed off a range of their 'specials' and their sub-4% low fixed rates today. Update: ANZ also made changes.

TERM DEPOSIT RATE CHANGES
BNZ reduced its RapidSaver bonus saver account interest rate by -10 bps.

BUILDING CONSENTS RISE +6.7%
The number of stand alone houses and retirement village units being consented is declining while multi-unit housing is growing strongy. There were +377 more dwelling consents issued in October than the same month a year ago, with +320 of that increase in just six jurisdictions: Auckland, Hamilton, Lower Hutt, Nelson, Waimakariri, and Dunedin. In Auckland itself, 127 of the +133 rise was in the Waitakere section of the City. The rise may be being held back by capacity constraints and raises doubts about whether activity can be sustained at this level.

'#1 SAFETY VALVE'
Higher bank capital requirements are necessary, RBNZ Governor Adrian Orr says, with big four banks' use of internal capital models to be constrained. Also see this.

AVERAGE
November consumer confidence lifted +4 points to around average levels. Perceptions of current conditions eased, but the future conditions index bounced back markedly to its strongest level in six months. The proportion of households who think it’s a good time to buy a major household item was little changed.

WHO IS FUNDING THE POLITICAL SPENDING
The Crown accounts for the four months to October came in worse than expected, with OBEGAL over the period at -$258 mln. This was entirely due to a sharp run up in the rate of spending, growing far faster than revenues. And that is saying something because tax flows from individuals is running almost +10% higher this year than the same period a year ago. Given that there are +2.8% more people in the paid workforce, that means that the tax take from working individuals is +7.1% higher. That contrasts with taxes on business, which is square as more and more companies are reporting slipping profitability. GST collections are up +9.4%. Primary taxes in individuals (PAYE and GST), now represent 75.4% of all tax flows. That is an unchanged proportion from the same 4 month period in 2017.

STRONG DEPOSIT GROWTH, BUT SLOWING
Term deposits make up 54.5% of all deposits at banks. These deposits now total $343 bln, up +6.5% in a year. The household portion of that grew even faster at +6.8% pa. But it is far slower than the average over the past five years, which showed household deposit growth at +8.6% pa. Note this deposit growth is faster than lending growth in any sector.

Mortgage loan balances grew +5.8% in the year to October and now total $253.5 bln at banks. At non-banks, the growth is a remarkable +23.2% pa as this low-doc sector continues its resurgence.

RUNNING OUT OF MOMENTUM
Personal consumer lending growth is slowing, and slowing fast. This includes both credit card lending and personal loans. In the year to October 2017 this grew +8.3% but this year it is up just +3.6%, the slowest growth in more than two years.

A LOW DEBT APPETITE
Commercial lending growth is very tame, with rural debt levels growing less than 3% pa and they haven't exceeded that now in 20 months. Debt levels to other businesses grew just +4.3% and that was the second slowest growth rate in almost 4 years. (It was growth at +6.0% in the year to October 2017.) Very low business confidence is being reflected here - businesses are unwilling to borrow to expand due to fractured confidence in prospects.

LOCAL CONSUMER CREDIT SECURITISATION
Latitude Finance, which trades as GEM Finance, is flogging off its consumer sales finance and credit card receivables in a securitisation to investors. At the 30 June 2018 cut-off date, the total collateral pool consisted of 331,161 accounts with a total receivables balance of NZ$1.0 bln. Fitch has given various tranches of this issue ratings ranging from AAA down to sub-investment grade BB. Over the whole pool, this receivables book offers investors an expected exposure of 4.25% for charge-offs, to give a 13.00% yield on a 10.75% monthly payment rate. There is no indication yet how attractive this will be to investors, but demand is expected to be strong.

SWAP RATES SOFT
Wholesale swap rates are down -1 bp across the board. The UST 10yr is now down at 3.02%. And the 2-10 curve has sunk to just +21.5 bps. The Aussie Govt 10yr is at 2.59% and down -3 bps, the China Govt 10yr is down another -2 bps at 3.39%, while the NZ Govt 10 yr is at 2.61% and down -4 bps. The 90 day bank bill rate is unchanged 1.98%.

BITCOIN FIRM
The bitcoin price is now at US$4,220 which is a +2.7% rise from this time yesterday.

NZD FIRM
The NZD is marginally higher today at 68.6 USc. On the cross rates we are unchanged at 93.8 AUc and at 60.2 euro cents. That puts the TWI-5 at 73.

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