Here are the key things you need to know before you leave work today.
TODAY'S MORTGAGE RATE CHANGES
No changes to report today.
TODAY'S DEPOSIT RATE CHANGES
UDC raised its 18 month rate to 3.45%, a +10 bps rise. In fact, this 'special' allows quarterly compounding and if you do that, the yield is 3.53%. The minimum investment is $5,000.
MONEY FROM THE SKY
The Reserve Bank today reported that the value of all housing in New Zealand reached $905 bln (yes, NZ$0.9 trillion). That is a +14% increase from the $791 bln our housing was worth twelve months previously. There are 1.809 million residences in the country, and in the year to March 2016 91,800 sold. So the prices achieved on those 5% have reset the market prices overall. And this data reveals housing gained 'value' by $110 bln in a year ($32 bln in the previous 90 days). To save you working it out, that is $300 mln per day! (Ok, so if you want to know, that has been $12.5 mln per hour!) Of course, most of that has been in Auckland. We owe $234 bln in mortgages on this.
DISAPPOINTMENT
Consumer prices were up only +0.4% in the June quarter and up +0.4% from a year ago; Economists had expected around +0.5% for both. The RBNZ had forecast +0.6%. Auckland rents were up +3.5% and Auckland new house costs up +7.6% from year ago. The headline rate was surprisingly low and markets reacted by marking down the currency and pushing down wholesale interest rates - because of expectations this data will push the RBNZ into a rate cut in August.
THE EXPANSION ROLLS ON
New Zealand's services sector continued to show solid levels of expansion in May, according to the BNZ - BusinessNZ Performance of Services Index. The PSI for May was 56.9. While this was 0.9 points lower than April, this was the same level of activity as February, and continues a post-55 level of expansion since November 2014. The industry group said that despite the slightly lower level of expansion for May, the fundamentals behind the main PSI result were still positive.
FARM SALES DIVERGE
Dairy farm sales and prices have fallen sharply but the rest of the rural market is stable. The same REINZ data showed that lifestyle block prices are at record highs.
WHAT, ME WORRY?
The stock market ignored the CPI data signals and is up today. And that is despite more softer signals for Wednesdays dairy auction. But the are following positive gains in Australia, Singapore, Hong Kong and Tokyo. Only Shanghai is down so far today.
SWAP RATES FALL
Wholesale rates fell across the curve today, softened at first by the international risk aversion, and then pushed lower by weak CPI data. Terms 2 yrs to 7 yrs are all down -4 bps. Terms 1 yr and 10 yrs are down -2 bps. NZ swap rates are here. Believe it or not but the 90-day bank bill rate has actually risen +1 bp today and is now at 2.38%.
NZ DOLLAR SLIPS FURTHER
It has not need the Kiwi dollar's day; it is down more than 1c against the greenback, and down about half that against other currencies. The NZD is now at 70.9 USc, at 93.4 AUc, and 64.1 euro cents. The TWI-5 is now back to 74.6. Check our real-time charts here.
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Daily exchange rates
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4 Comments
so a national LVR of 25% and interest rates likely to be below 4% for years to come - not seeing a correction anywhere on the horizon - suggests the answers wont be found in price drops, inflation or interest rates - instead needs to be on increasing build capacity, freeing up affordable land, training more builders and tradies reducing council red tape barriers to new builds, creating better paid jobs - and teaching people better financial habits to save for their deposits!
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