Here are the key things you need to know before you leave work today (or if you work from home, before you shutdown your laptop).
MORTGAGE RATE CHANGES
Bank of Baroda trimmed its home loan rates. All rates are here.
TERM DEPOSIT/SAVINGS RATE CHANGES
BNZ has cut its TD rates today, and no longer offers a 5% six month rate. (H/T to the anonymous phone caller.) Bank of Baroda also trimmed rates. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.
BIG IS BEST?
The latest quarterly report on complaints to the Banking Ombudsman service shows that the main bank with the highest level of cases at 256 in the quarter was ANZ. In order, they were followed by ASB, Kiwibank, Westpac, and BNZ. Among all banks (including challenger banks), only ANZ, BNZ and Westpac had complaint and dispute levels lower than their market share.
THE INTEREST LOAD SWELLS, BUT THAT ISN'T DISCOURAGING EXTRA PAYMENTS
December quarter data out from the RBNZ shows that home loan borrowers par $22.3 bln in interest on their borrowings in 2024. That is a sharp +26% more than they paid in 2023, and a massive +86% more than they paid in 2022. This series is now ten years long, and since 2014, the amount of interest being paid on home loans has more than doubled since then. (And perhaps you may recall, in 2021 they paid just $9.5 bln in interest across all home loans.) Despite all this extra interest load, we should also note that borrowers are still making heavy 'excess repayments' over an above their scheduled repayments, an extra $4.4 bln in the December quarter alone, and extra $16 mln for all of 2024. So there is actually no sign here or any mortgage stress. (It is not in the lender's interest that borrowers make early repayments, but they are.)
USING THE HOUSE AS AN ATM IS OUT OF FAVOUR
Since the C33 data series began a decade ago, we can observe that mortgage top-ups were the lowest ever in 2024 - and declining during the year. Using the house as an ATM is out of favour and now only 11% of 'new' loans were of that type. In 2019 it was almost 20%.
MARKETS HOPEFUL
In Australia, there were some mixed signals in the Q4 CPI data released there today, along with their Monthly Inflation Indicator for December. The Q4 CPI rate fell to 2.4% from 2.5% in Q3, and slightly better than expected. Underlying inflation fell to 3.2%. But the month inflation indicator rose to 2.5% in December, up from 2.3% in November and 2.1% in October, and actually the highest in four months, so tracking the "wrong way". Markets however focused on the "good" quarterly result, anticipating this will open the door for a RBA rate cut on February 18. But you have to wonder if that is actually how Bullock & Team see it.
SWAP RATES STABLE
Wholesale swap rates could be a little softer today on global forces so keep an eye on our chart below which will record the final positions closer to 5pm. The 90 day bank bill rate was down -2 bps on Monday at 3.96%. The Australian 10 year bond yield is down -5 bps at 4.42%. The China 10 year bond rate has held at 1.64%. The NZ Government 10 year bond rate is up +3 bps at 4.62% while today's RBNZ fix was 4.56% and up +1 bp. The UST 10yr yield is now just on 4.53% and down -2 bps from where we were this time yesterday. Their 2yr is also down -2 bps to just on 4.19%, so that positive curve is now at +34 bps.
EQUITIES MIXED BUT SUBDUED
The NZX50 is up +0.1% from this time yesterday. The ASX200 is up +1% from yesterday at this time on rate cut hopes. Tokyo is up +0.4% in early Wednesday trade. Hong Kong is up a mere +0.1%. Shanghai is down -0.1% at their open. And Singapore is up +0.1%. Wall Street ended its Tuesday session up +0.9% on the S&P500 and a bit more than half the prior day's fall.
OIL MARGINALLY FIRMER
The oil price is a little firmer from this time yesterday now just under US$74/bbl in the US, and just under US$77.50/bbl for the international Brent price.
CARBON PRICE DIPS AGAIN
The carbon price is still within its tight range, but dipped again today to NZ$63.25/NZU. The next release of units at the official auction is on March 19, 2025. See our new daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.
GOLD RISES
In early Asian trade, gold is up +US$22 from yesterday, now at US$2764/oz.
NZD ON HOLD
The Kiwi dollar has slipped a minor -10 bps from this time yesterday, now at 56.6 USc. Against the Aussie we are up +40 bps at 90.8 AUc. But against the euro we are unchanged at 54.2 euro cents. This all means the TWI-5 is now just under 67.2 and little-changed from yesterday.
BITCOIN UNCHANGED
The bitcoin price has moved very little today, still at US$101,764 from this time yesterday. Volatility of the past 24 hours has been modest at just over +/- 1.7%.
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88 Comments
THE INTEREST LOAD SWELLS, BUT THAT ISN'T DISCOURAGING EXTRA PAYMENTS
I find this very interesting and surprising. I thought that all the extra interest cost would suck any excess funds out of most borrowers' reserves. I guess I was wrong.
Does anyone have a plausible explanation, why many borrowers are able to make extra repayments, at a time when interest cost are so much higher ? (24% higher than in 2023 and 86% higher than in 2022)
Despite all this extra interest load ($22,3 bln), borrowers are still making heavy 'excess repayments' over an above their scheduled repayments, an extra $4.4 bln in the December, and extra $16 mln for all of 2024
I suppose it should read $16 bln for 2024 of excess repayment. If this is the case then:
2022 interest cost $12.0
2023 interest cost $17.7 bln
2024 interest cost + extra repayment: $38.3 bln
Where does all this extra money come from ???
There's good income, because the average mortgage holder has gotten older over time, and incomes rise with age.
There's also probably more motivation to make extra repayments if the interest rates are higher.
All throws water on the 2022 theories that all the borrowers are in debt to the max and will fold as soon as rates rise 4%. The people taking the beatings in this climate are the worse off
Parasitic indeed. Asset prices are set by ease of credit. In other words tomorrows yet to be earned income, rather than yesterdays savings. One person playing the game forces everyone to play the game.
Keeps everyone on the run, accepting this is the natural order of things.
Here's the reason, Yvil: weekly rent/weekly rent increases.
Whereas in the past when rates were low, landlords tended to spend the profits (i.e., the left-over dollars after all running costs were paid) of their rental income on lifestyle upgrades (for example, travel).
Now that interest rates are higher (likely for longer), more of those profits is being put into paying down the debt.
Remember, nearly 1/3rd of all NZers are tenants - so there is a big value in assets/borrowing for that sector of the market (i.e., the non owner-occupier sector of the overall housing stock)..
Also, bear in mind that the tax relief for landlords is also kicking in - again, increasing bottom lines from that sector.
There is no doubt that repaying principal is wise when interest rates are higher. But it's a different thing to be able to do so, especially when NZ has been in recession for over a year, and that's the bit that surprises me, the capability to repay more than the already increased rate of interest in period of recession.
For those that are in the middle or towards the end of a table mortgage, the bulk of a mortgage payment is going towards principal and not the interest portion.
When interest rates were dropped people continued to make the same payments on their mortgage, with the extra amount allocated to paying down the principal faster. By the time their low fixed mortgage rate expired and they rolled over to higher interest rates, the amount owing on the mortgage had been reduced, so less interest was owed even at higher rates.
The two tier economy....the (remaining) middle class are capable of meeting the required payments, and then some, and are seeking to reduce their liability (as you do, if able)...but those earning less than the median are finding they are increasingly unable to meet their day to day expenses.
A few years ago there was much discussion about a K shaped recovery...it wasnt a recovery but it was K shaped.
As we will discover it is the ability of those on the (declining) lower leg of the K that determine whether the model can continue.
when interest rates are high , making extra payments will knock longer off your loan term than when interest is lower .
Conversley, when interest rates were dropping , if people left their repayments as they were , they would show as been ahead of their mortgage payments. But when interest rates went up , they were struggling , even though technically they were still ahead of their mortgages . i was in this situation , and it even took a lot of ph calls to the bank to finally find a support person who understood how this could happen , and allow me to reduce payments back and still be ahead of my payments. the app etc wont allow you to reduce your payments.
Over the ditch, Bill Shorten has golden parachuted into a role as the VC at University of Canberra - very much a mid-sized regional university. Remuneration is higher than that of the Prime Minister. Wonder if Robbo sent his congrats. Like Robbo, no relevant qualifications. They know these gigs are icing on the cake, but higher education needs to be focused on quality education, not places for the ruling elite to feather their nests.
Shorten's salary will be $860,000, including superannuation and other benefits, more than double the $404,000 he had received on the frontbench.
https://www.skynews.com.au/australia-news/politics/bill-shorten-to-rece…
"A society is pre-doomed when its education/knowledge…"
So, the society is doomed… before being really doomed ? Or how does that "pre-dooming" work ? I'm trying to get my head around this. If "doomed" is expecting a fatal outcome in the future, then "pre-doomed", must come before that expectation. 🤔
... remember the British TV sitcom " Dad's Army ? "
They had a bug eyed funeral undertaker Private Fraser , who when things were looking ominous would wander around mouthing off " we're doomed... doomed I tell ye , doomed ! " ...
Well , every time PDK pops up here with his doom laden derangements , I think " ah ... Private Fraser ! " ...
It's his new power ... kind of like a PreCog in the film Minority Report ... PDK can sense doom ... he foresees the doomination of mankind ... he senses it and runs around here swivel eyed and babbling " doomed , I tell ye ... DOOMED ! " in a thick Scottish accent ...
A society is pre-doomed when its education/knowledge facilities are reduced to trough status for the revolving-dootr crowd.
Industrial era education is about creating an army of capable and compliant workers.
Turn up at 8:30
Morning tea at 10
Lunch at 12:30
Etc etc.
In theory making us into human ant colonies is pretty efficient. We just made the ants too affluent.
Australian Universities are incredible cashflow generating monsters - foreign (Chinese) students and watered down liberal degree's are the levers.
Why a politician and why $860k, because greenlighting 1 million students is a political decision every day of the week.
Russia is outproducing NATO 4-to-1, for much less money, according to NATO Secretary General Mark Rutte.
When you look what Russia is producing now in three months, it's what all of NATO is producing from Los Angeles up to Ankara in a full year, and then Russia is not bigger than the Netherlands and Belgium combined as an economy, the two of you together is the Russian economy, and they're producing in three months what the whole of NATO is producing in the year. And don't forget, when you compare Russian numbers, that what you can buy in Russia for the same money is, of course, much more because they do not have our high salaries. They don't have our bureaucracy. They can move at a higher speed, and they have basically created a war economy, and the whole industry is now on a war footing.
Yeah, so it's pointless comparing a wartime economy with ones that are living peacefully (relatively).
In a time of war, the bureaucracy the author mentions gets thrown out the window. America's military was pretty under resourced in the late 1930s. Within a few years they were capable of equipping themselves, Russia, England, and the rest of Europe.
A common misconception states that, faced with the fact that ball-point pens would not write in zero-gravity, the Fisher Space Pen was devised as the result of millions of dollars of unnecessary spending on NASA's part when the Soviet Union took the simpler and cheaper route of just using pencils, making the pen an example of overengineering.[1]
In reality, the space pen was independently developed by Paul C. Fisher, founder of the Fisher Pen Company, with $1 million of his own funds.[2][3][4] NASA tested and approved the pen for space use, especially since they were less flammable than pencils,[1] then purchased 400 pens at $2.95 apiece (equivalent to $27 each in 2023).[5] The Soviet Union subsequently also purchased the space pen for its Soyuz spaceflights.
Writing in space. The main issue from my understanding was pencils release contaminates which interfere with equipment when in a closed system like a space station or Apollo capsule.
Rutte is also pointing out that Russia is producing more efficiently at lower cost. Similarities with China and DeepSeek.
Some 75% of Russian gear being "manufactured", is the refurbishment of Soviet-era stock. It's significantly cheaper and quicker to drag a 60 year old tank out of a paddock, slap some paint on it and do some mechanicals than it is to manufacture a brand new, 2024-era technology tank.
And the attrition rate of Russian hardware is terrible. It is poor value for money, but it's also all the Russians can manage. If the war gets into 2026 they are going to be very short on gear as that Soviet era surplus is almost exhausted.
It's a really ill informed opinion, designed to fuel a sentiment that the West is ineffective. Not that it's amazing, but Russia is an absolute cot case.
Where you read this P? The Economist? Last summer, just before Russia's offensive accelerated, The Economist claimed (again) that Russia was on the verge of running out of armor.
After selling endless war and "victory-around-the-corner", it seems the esteemed publication has thrown in the towel and switching their narrative.
https://www.economist.com/europe/2025/01/27/amid-talk-of-a-ceasefire-uk…
I don't read the Economist. Actually, I don't read much MSM at all, outside of domestic news (and even that's small). I don't need to be an MSM shill to highlight flaws in some of the propaganda you'll gladly take as verboten, usually for self serving reasons.
There's fairly extensive, satellite verified timelapses of Russian storage facilities, and equipment loss stats that verify most of the gear Russia is sending into the field is refurbished and very old. Very little is newly minted.
Perhaps a starting point is the YT channel Covert Cabal.
Does it matter P if they're achieving their objectives? And perhaps you should think about what Rutte is saying instead of focusing on your own armchair narrative. Similar to Afghanistan, the Taliban got what they want based on limited resources against the military might and expertise of the Anglosphere.
Their main objective was to annex Ukraine. At this rate they will take hundreds of years, and they don't have that long. If their secondary objective is to kamikaze their economy, whilst killing and wounding hundreds of thousands of their population and wiping out their Soviet era stockpile, against a numerically inferior foe, they have made great success.
I'm not following a narrative. This is a shitty conflict of attrition. The fog of war is often hard to see through, and propaganda aplenty, so I take a wide range of sources to try and form the best understanding of what's happening in Eastern Europe. Russia isn't a credible threat to NATO so they don't need to engage a war economy.
You on the other hand, flock to anything even remotely anti-Western like a moth to a lamp, incapable of determining anywhere else could be an even shittier mess.
Their main objective was to annex Ukraine.
You made that up based on what media you've consumed. But if we look at the opinions of Jeffrey Sachs - who you should agree is far more informed that you would be - Russia's stated goals in Ukraine are not as simplistic you would like to think and what you believe from Western media and YouTube. Sachs argues that Russia's actions are primarily a response to what it perceives as provocations by the US and NATO. Based on Sachs' perspective, Russia's main objectives are:
- Ensuring Ukraine's neutrality and preventing NATO expansion: Preventing Ukraine from joining NATO
- Implementing the Minsk II agreement: Russia wants to see the fulfillment of this agreement, which was meant to resolve the conflict in eastern Ukraine but was not fully implemented.
- Protecting what Russia views as its vital security interests in the region: Sachs suggests that Russia sees the conflict as essential to its national security, rather than a simple act of aggression
Jeffrey Sachs makes an effort to be controversial at the expense of being an accurate analyst. He should not be ones only (or primary) source of information.
Russia thought they could roll the Ukrainian government in a few days, and failed abysmally. This is the 5th time they've invaded a neighbour since the fall of the Soviet Union - during which time most of it's prior significant former members have tried to get as far from the Russian sphere of influence as possible.
So you know little to nothing about the situation, then seek tidbits to align with your preconceptions.
Jeffrey Sachs makes an effort to be controversial at the expense of being an accurate analyst.
Jeffrey Sachs is an American economist and public policy analyst. Not an internet troll.
Sachs served as an economic advisor to Gorbachev and Yeltsin during Russia's transition from a planned to a market economy. This followed his successful advisory role in Poland's economic transformation. Sachs held the position of economic adviser to the Russian government while also serving as a professor of international trade at Harvard University.
I think he understands Russia better than people sitting at computers in Aotearoa.
He aligns with Russia better than most, for sure. The champion you are holding up is as far from impartial as you could get, except maybe Putin himself. Totally accepting his views without any other form of inquiry, is the exact same behaviour as the sorts of people you like to lambast for swallowing MSM narratives.
If Russia's primary concern is keeping NATO from their borders, helping nudge Finland into NATO is a total failure.
Having Ukraine hold Russian territory as a result of Russia's invasion, also a total failure. Russia is now a far less safe place than before it's invasion of Ukraine.
You don't invade another sovereign country if those are your top 3 aims.
It's not a reckon.
You formed a conclusion first (West bad, Russia good), then sought out two dissenting voices from officialdom to confirm your bias. Your approach to many subjects lacks objectivity. I'll happily change any view in light of good information.
It is still crazy you haven't emigrated.
You formed that conclusion a while ago, it's a pretty common theme in your posts. We can evidence this by the almost complete absence of any criticism of a non Western (or perhaps non-anglo) entity in your comments.
He's making a case for funding. He conveniently ignores that most Russian production is the refurbishment of equipment that's already built. And that much of that equipment is obsolete.
Did you know those two latter facts before you posted? Did investigating his claim and motivations before you copy pasted it enter your mind?
In early Asian trade, gold is up +US$22 from yesterday, now at US$2764/oz.
Gold very much at its all-time high - now up +35% in 12 months. Prices are surging toward $2,800/oz with YTD gains nearly 2x the S&P 500's return. Even as USD hit a new 52-week high and the 10-year note yield broke 4.8%, gold surged. Historically speaking, gold should be down sharply, but the opposite is happening.
In the past 12 months, it's been good for both the 10-year note yield and USD. However, gold has gained 5x the return of DXY. Gold is a zero-yield asset which historically falls in high rate environments.
And a stronger USD makes gold more expensive for foreign investors. Even with inverse indicators rising, gold continues to make highs so it is pricing uncertainty.
Fonterra rolled out its initial electrification of NI boilers and exit from Gas today,with another 3 electrode boilers and 2 resistive boilers across 3 sites along with its initial pilot of 6 EV tankers.Statement enforced the narrative of future proofing its inputs on the energy side.
These projects will reduce the need for imported gas.
https://www.fonterra.com/nz/en/our-stories/media/fonterra-announces-ele…
Thanks for the info - good stuff.
But
How much fossil energy use was displaced? Fonterra will only go net-reduction when the build energy is recouped.
https://dothemath.ucsd.edu/2011/10/18/
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