Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
BNZ cut its two year rate by -4 bps to 4.65%.
DEPOSIT RATE CHANGES
No changes to report today.
CURRENCY MANIA
Bitcoin has pushed on up over US$10,000 today. That is a rise of US$2,035 in the past seven days, a rise of $3,288 since the beginning of November, and a rise of $9,041 since the start of 2017. FOMO is rising. What's the next high point and when? (When is the reversal?) We now track the daily bitcoin price in our currency charts below and here.
LVR RULES TO GET RELAXED IN JANUARY 1
The Reserve Bank will begin rolling back the LVR restrictions with the 'speed limit' for high LVR lending for banks increased to 15% from 10%; Investors will be required to just make 35% deposits compared with 40% now. This change was signaled as just the start of the rollback.
A LIQUIDITY SOLUTION?
We have added a new resource today to our service, a market platform for trading in alternative assets (like property syndication shares). We are mirroring the Syndex Exchange. There is more about alternative assets here. Finding a mechanism to provide liquidity to these high-yield assets has been a longstanding problem. In the early stages, it will be a buyers market.
FOREIGNERS TARGETED ON FARMLAND SALE CLAMPDOWN
All purchases of rural land over 5ha (except forestry blocks) will be subject to Overseas Investment Office assessment, in a new policy announced today.
ANZ AND CMC MARKETS TO TEAM UP
The urge to 'trade' contracts for difference (otherwise known as gambling) is driving the British-owned CMC Markets platform who are seeing a deluge of demand for "wealth diversification" by young tech-savvy Chinese traders. ANZ is teaming up with CMC Markets in September 2018.
UDC FACING A JUNK RATING
The sale of UDC by ANZ to HNA is dragging on. S&P today issued this assessment: "Our 'BBB/A-2' ratings on New Zealand-based UDC remain on CreditWatch with negative implications, pending the finalization of the company's sale -- announced on Jan. 11, 2017 -- to the privately owned Chinese conglomerate HNA group. We assess the GCP of the HNA group at 'b'. If the sale to the HNA group is successfully concluded as currently proposed, we expect that: i) UDC's SACP would weaken to 'bb' from 'bbb-'; and ii) a number of regulatory and structural features would partly insulate UDC from the broader HNA group, from a credit perspective. Consequently, we would expect to lower our long-term rating on UDC to 'BB-' and the short-term rating to 'B'."
A NEW BOND ISSUE COMING
Kiwi Property is planning an offer of seven-year fixed-rate senior secured bonds to institutional and New Zealand retail investors. They say they will be rated BBB+ by S&P. No announcement yet of the amount or interest rate. It looks like this is new funding as they don't have an existing bond due to mature.
FLYING DOG
An Irish aircraft leasing company is creating its own airline because it can't find anyone to borrow its A380 superjumbos. Dublin-based Amedeo counts eight A380s among its fleet, and has a further 20 on order from Airbus, but such is the lack of interest in the world's largest passenger plane that it has been unable to renew its leases, or find new customers, despite months of negotiations.
WHOLESALE RATES EDGE DOWN
Swap rates are up -1 bp across the curve again today. The 90 day bank bill rate is unchanged at 1.92%.
NZ DOLLAR SLIPS
The NZ dollar has slipped today post the RBNZ FSR and is now at 68.9 USc. On the cross rates we are just under 90.8 AUc, and 58.2 euro cents. That has the TWI-5 marginally softer at 71.7.
You can now see an animation of this chart. Click on it, or click here.
Daily exchange rates
Select chart tabs
9 Comments
Flying Dog indeed!
Doric is receiving an increasing number of inquiries regarding Amedeo, who is wrongfully using the Doric franchise and Doric track record for its own benefit. Doric is a fund manager with 60 employees and more than USD 8 billion of assets under management. These include 36 aircraft on lease to internationally renowned airlines. Amedeo is a startup venture holding a speculative aircraft order for 20 Airbus A380s. It was founded by three former Doric employees, who had been asked to leave Doric. On its website, Amedeo falsely claims experience..... etc etc
Who is holding who hostage?
In New Zealand, household debt has risen from 146 percent of disposable income to 168 percent over the past five years (figure 2.5). This debt appears to have become more concentrated. The Reserve Bank estimates that the average debt-to-disposable income ratio of households with mortgages is currently
around 325 percent, up from 280 percent in 2012. It is estimated that only 8 percent of households currently own investment properties but these households account for around 40 percent of housing debt. While only a small proportion of household lending is currently non-performing (see chapter 4), high debt levels imply that some borrowers are likely to have difficulty servicing their debts if interest rates rise or incomes decline. Read more (page 11, 13 of 56)
(Thx for the link!)
The Reserve Bank’s recent hypothetical borrower exercise, which asked banks to calculate the maximum amount that they would lend to a range of hypothetical borrowers. Both buyer types are couples with a combined gross salary income of $120,000 and declared monthly expenses of $1,333. The investors are assumed to have a potential rental income of $27,000. This repeated an exercise that was conducted in 2014. The 2017 results suggest that maximum borrowing amounts have declined by around 5-10 percent since 2014. More than three-quarters of banks reported that household credit conditions are tighter now than in the previous three years.
Monthly expense of $1,333 ?! Good luck with that. Three hundred bucks a week to fuel the car(s), put food on the table, pay the rates and insurance and God knows what else we all have to outlay just to live...and $120k is about $30k above the median household income isn't it? So why use that?
Oh, I know! The RBNZ live in La-la Land, don't they? That's where their figures come from.....
Have a look at the working for families table and see what a low income family with 6 kids can receive a week.
https://www.workingforfamilies.govt.nz/tax-credits/payment-table.html
Found it: http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11944806
Rent for multiple people, transport, electricity, water and other bills all need to be paid before food so in part her story makes a bit of sense, (especially in the cities with the most work and access). However even the food banks are stretched in major areas. Often I see families and mum's who end up going without themselves to get what their kids need. (That being said I normally see the ones who end up by themselves or out of work through medical injuries or abuse. They did not plan to end up in that position and sometimes not having children was not an option available to them.)
Each case is different so I know a variety of others had different reasons, medical status and abilities. MS and other diseases are common as well as other genetic disabilities which can start & get diagnosed later in life out of the blue. Went to a medical conference and even people as late as 45-50 were finding out they would be unable to walk without aid in 5-10years and work would be difficult if not impossible in some sectors (and they were lucky they got that much warning and it started later on). Yet the calculations for everyone and cost of living is kept roughly the same and incredibly low (regardless that many have increased transport, medical and home care payments they need to make just to get by). Often even pensions are treated as if everyone does not use the private rental market. Hence the lack of state & council housing is an issue, (as the housing is almost rent controlled, managed, usually able to be set up for mobility aids, easier for those trying to start from scratch in poverty, close to work and medical services etc).
$1333 per month seems to only account for people without children (and not needing daycare, rare with both parents working), not including costs to enable healthcare for the adults, not including costs of transport, not including costs for main accommodation (as if they were rent and mortgage free), or even not including costs for bills... Where on earth do they get their numbers from, WINZ and pension rates or their live in unmarried sons?
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.