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ASB raises two fixed home loan rates. ANZ does too. The increases are small, but add to a rising direction of flatter and higher rates, taking levels back to what we had in 2015

Personal Finance / analysis
ASB raises two fixed home loan rates. ANZ does too. The increases are small, but add to a rising direction of flatter and higher rates, taking levels back to what we had in 2015
[updated]
rate ladder climb
Source: 123rf.com Copyright: tiero

Fixed mortgage rates below 5% are the next benchmark to become increasingly rare.

Today (Thursday), ASB has raised their one year and eighteen month fixed rates. This mirrors a recent Westpac rise, and these two banks are the first two to have no rates under 5%. It is something we haven't seen since June 2015.

Update: ANZ has made the same fixed rate changes.

Today's change by ASB and ANZ weren't large, and ASB matched them by even smaller rises in two short term deposit rates.

But these small and repeated moves add to a developing trend where the rate curves are flattening as they rise.

Given we are entering the spring real estate selling season, rising mortgage interest rates are unusual. This is often the time of the year when rates become their most competitive, and fall. But sales volumes in the housing market remain very low and the mortgage market is now dominated by refinancing activity. The general market uncertainty by borrowers probably makes it easier for banks to hold on to existing customers who may be nervous about exposing their finances if they go out to seek an alternative bank. A conservative outlook by borrowers creates the conditions for banks to enhance margins marginally.

But for those borrowers with strong enough financials, now is probably a good time to shop around. Banks will have fewer opportunities to nab market share and they will take them enthusiastically. The re-emergence of cash and non-cash incentives is testament, some of which cap out for as much as $20,000.

A check of the swap rates at the bottom of this article shows we have been in a period of steadily rising wholesale rates that started at the beginning of August. This is a trend that was been driven by global forces, especially the US Federal Reserve. Bond markets have come to accept that the Fed's will, will prevail here until the back of inflation is broken. It may take a long time.

The next Fed review is on September 22, NZ time, and financial markets are coming to accept that another 75 basis points rise is a live possibility. That means wholesale rates will face upward pressure even if the US faces growth challenges. The Fed has clearly signaled they are prepared to pay an economic growth price to get inflation back under control. If they don't their market cred will be shot.

And for New Zealand, that means we won't be able to avoid those upward pressures.

They next time we get a Consumers Price Index reading will be on October 18. That is now only five weeks away. The best-case scenario is that inflation may have peaked in September with petrol prices having topped out. But the labour market remains tight, the NZ dollar is depreciating, and imported inflation shows no sign of abating. You would be brave to assume the September CPI will be significantly less than the June rate of 7.3%, so no relief in that department is on the horizon.

One useful way to make sense of these changed home loan rates is to use our full-function mortgage calculator which is also below. (Term deposit rates can be assessed using this calculator).

And if you already have a fixed term mortgage that is not up for renewal at this time, our break fee calculator may help you assess your options. But although break fees should be minimal in a rising market, they will start to bite in a falling market.

Here is the updated snapshot of the lowest advertised fixed-term mortgage rates on offer from the key retail banks at the moment.

Fixed, below 80% LVR 6 mths   1 yr   18 mth  2 yrs   3 yrs  4 yrs  5 yrs 
as at September 8, 2022 % % % % % % %
               
ANZ 5.15 5.15
+0.16
5.35
+0.06
5.45 5.69 6.85 6.95
ASB 5.15 5.15
+0.16
5.35
+0.06
5.45 5.69 5.79 5.79
4.99 4.95 5.49 5.39 5.69 5.89 5.99
Kiwibank 5.45 4.95   5.45 5.69 5.89 5.99
Westpac 5.05 5.15 5.35 5.45 5.65 5.75 5.75
               
Bank of China    4.85 5.09 5.19 5.39 5.59 5.59
China Construction Bank 4.99 5.15 5.29 5.45 5.69 6.85 6.85
Co-operative Bank [*FHB special] 4.89 4.79* 5.39 5.39 5.69 5.79 5.89
Heartland Bank   4.79   5.15 5.14    
HSBC 5.04 5.09
+0.20
5.19
+0.10
5.24
+0.10
5.44
+0.05
5.64
-0.45
5.64
-0.55
ICBC  4.99 4.79 5.15 5.15 5.69 5.89 5.99
  SBS Bank 4.95 4.89 5.35 5.29 5.49 5.79 5.79
  4.89 4.85 5.19 5.29 5.55 5.65 5.65

Also updated with changes by HSBC.

Fixed mortgage rates

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Daily swap rates

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Source: NZFMA
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102 Comments

Hutt Valley Market  Update 5th Sept

 

Current Market Listings

537 houses on the market- Down 1 on last week .

Average number of houses sold each week 25. This is well down on last year where 40 houses were selling a week and at the peak in March 2021 50 houses a week were selling.

538 houses on the market with 25 a week selling means there is 21.5 weeks stock on the market.

House Price Reductions

269 houses have a listed price

66% of the houses listed with a price have reduced their price since listing

The average markdown has fallen this week from 109K to $103K. the fall is due to a number of houses who had discounted heavily coming off the market- lowering the average decline.  It should also be noted that a number of houses that listed in June and July are yet to lower their prices, this may indicate this is the lowest they are willing to go on their price

Of those that have listed prices (pool 269) -63 have reduced their prices by 100K

23 have reduced their prices by over 200K, 7 have reduced their prices by 300K  and 2 now have reduced their price by 400K with the biggest reduction been 455K.

The data continues to show the majority of houses listed are under 900K. The Median house price for all 537 listings is  $795K this month.

Market Valuations

The latest QV valuations (valuations by QV which are updated every month and give an approximation of a houses value) have now dropped $200K since Jan for the Hutt.

Keep in mind new RV ratings for the Hutt Valley are due to be calculated in Sept and released in Nov. A number of people who bought in the last 12 months are going to find their house is worth a lot less than what they paid for it.

Homes is showing prices dropped roughly 2.5% in August alone – with most suburbs recording a drop of 25-35K for the month.

The latest round of updates that have come through this week show the following

 

  • Woburn (the hutts most expensive suburb) – average house price dropped 120K in value in July and is down 310K from $1.66M (in Feb 22) to $1.35M, this is a 6% drop YOY and a 35K drop from Aug

 

  • Petone – dropped 65K in value in June and is down $220K from $1.19M in Feb to $970K This is a 13% drop YOY and a 25K drop from Aug
  •  
  • Wainuiomata (the huts cheapest suburb and attractive to investors and FHB’s) – dropped 50K in value in July and is down $175K from $870K in Feb to $695K. this is a 13% drop YOY  and a 25K drop from Aug.

 

Houses sold vs houses removed

My records show 301 houses listed with a Price have sold YTD

I have records of a further 264houses that have been removed from the market unsold YTD. 

28 of those houses removed from the market have been listed on the rental market. 

Length of time on the Market

 

  • 411  houses have been on the market for over 30 days  - 76% (last week it was 391)

 

  •  318 houses have been on the market for over 60 days - 59% (last week it was 313)

 

  • 222 houses have been on the market for over 90 days – 41% (last week was 215)

 

  •  156  houses have been on the market for over 120 days -  29% (last week was 149)

 

  • 112 of the houses have been on the market for over 150 days  - 21%

 

  • 69 of the houses have been on the market for over 180 days (6 months) – 13%

The number of houses on the market over 60 days is now over 58%.   This has risen from 32% of houses in mid March (one in three), 1 in 3 houses have now been on the market more than 3 months , 1 in 4 have been on the market over 4 months and 1 in 10 have been on the market over 6 months.

Rental Market

This week the rental market has 174 properties for rent (up 5 on last week) up 71 on this time last year, – when just 103 houses were for rent. 

The percentage of properties listed above $650 is at 35%. This is the 7th week in a row where the percentage of rentals over $650 has been less than 40%.

Median Rental price for the Hutt valley is $580 a week (this is a $20 fall from the previous $600 a week midpoint)

Average rental price reduction is $55 a week. The number of new build listings has continued to slow but there are still some great rental prices in this space with a couple going for $680 a week for a 3 and 2 new builds.

 

 

 

 

 

 

 

 

 

 

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64

Awesome work there ikimpaul

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8

Having kept an eye on your updates i wasn’t at all surprised to read this story https://i.stuff.co.nz/stuff-nation/assignments/contribution/129812558/w…

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6

This story certainly puts perspective on a similar story on stuff earlier this week. about someone needing to take 100K off a property in Kapiti. My initial thought when I read that original story was - mate thats what everybody is reducing their house by, not sure how this is an actual news article - need to  talk to those that are taking 200K-300K off their price - here we are.  

Ironically Wellington looks to be in a worse position - was sent a flyer for a house in Nothland currently on the market at $1.955M - a whopping 500K below its RV. Most of the homes data is showing 15-20% declines in price from this time last year for wellington suburbs.

Newtown is down 17.7%

Mt Victoria is down 21.1%

Khandallah is down 15.5%

Johnsonville is down 15.4%

The declines in the lower hutt are now looking minor compared to Wellington city

  

 

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9

That whopping 500k below RV doesn't really tell us much. Sales history of the particular property is needed.

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1

Last sold 2017 $1,639,000 . Assuming they get close to asking its a 4% pa increase each year for 5 years.

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1

I don’t think anyone is getting asking. That’s the precise problem for sellers right now. 

 

And does 4% include the mortgage interest, rates, maintenance or improvements they have made? Looks like a fresh external paint job at the very least, and for a house that size would have been $35k+  

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3

I've been able from my records - been able to locate the property in question.

A few facts not mentioned in the story - it was brought in 2016 for 398K.  It's Sept 2019 RV is 500K. It appears its just sold for 786K - so $286K gain on its last ratings valuation and double what they paid for it - 6 years ago.

Looks like they split the block in 2020 (it looks like they had a 650sqm block- now 3 properties sit on the block and the property in question is now 277 sqm - effectively a townhouse size block with a 100sqm house on it. Two new townhouses have been built on the back.

Is the price fair they got in the end - absolutely yes- the house might be a 4 and 2 but its really town house size on a town house block. Probably highly optimistic to think they were going to get $1.1M for what was a townhouse.

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2

Quite the clever developers. Yeah, I see a lotta folks who think the original house post-subdivision is worth what is was when on a full size section.  And its worked for some in the past.  Thanks again for all your reporting.

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0

If you get a chance to listen to bernard hickey talking to Jamie Mackay at the Mainland property conference, do it. It will blow out your DGM brains

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8

HW2, you forgot, DGM's don't have any brains.

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4

I wanted to give them the benefit of any doubt.

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4

Can you summarise please? 

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2

Once bitten .... no thanks.

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2

Have I ever bitten you? Lol

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6

Gee whizz

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2

Don’t waste your time Ginger, he’s an imbecile.

Previously known as ‘HouseWorks’.

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8

You would know about being an imbecile housemouse the con artist formerly known as Fritz 

 

Would you like to get dirty and get into some mud slinging 

 

As for batting for the gingernut go for it

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5

There you go again. On the booze again?

remember him now Ginger? How could one forget.

for a while you seemed like a reformed person.

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4

You're a real winner ... not with your little cheap shots. Do you feel good about yourself HouseMouse do you feel like you are a man now? If you are going to have a go at least say something witty 

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3

You need to watch your drinking, down there in Dullsville, whoops I mean Hamilton.

Get some help 

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4

No get some help yourself if what I say or who I am triggers you that much. Let's not forget it was you who jumped in and tried to set something off HM. Do you always act like that around others, maybe God can help you hahah

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1

7% guaranteed is coming true...

Where is the prophet to guide us through these turbulent times 

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21

He would approve of the image used for this article

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10

This is simply a return to sense in the valuation of capital.  

Up
31

Agreed. The amount of emotion this process has invoked simply shows how far from reality we have slipped.

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33

We grew accustomed to and began to feel entitled to getting rich by living off debt others must pay, rather than by producing something of value. 

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5

100%, Utah

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5

What do you read into the building divergence between 2yr fixed and floating rates? 

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0

Perhaps it's past time when we should all be heeding those who ultimately set mortgage rates - The Central Banks - the RBNZ, in our case?

They have made it quite clear that interest rates are going to be raised. Why, doesn't really matter - take your favourite pick of factors. Just that they are going to do it. Saying that "They've been wrong before!" won't matter. It's going to happen.

The reason that they are doing it progressively, and not 'all in one hit' is to avoid a stampede of stressed sellers (of whatever it is). 'Slowly-and-gently' will squeeze stressed debt holders out of their commitments at each incremental rise. It will also provide the aware with an option to 'lock in now' and stabilise their risk profile before it gets out of control.

When will it all end? Probably way later and higher than any of us think.

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21

Last night the Canadian central bank was the 'next cab off the rank' in hiking interest rates, following the RBA on Tuesday, but the big one will be the European Central Bank (ECB) later tonight ....

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5

must be a few builders worried. A million dollar house with a 35% deposit will now costs a whopping 840 a week on a 30 yr term. With opex on top you be looking at 1200 a week. up that to 6.5% that's 1300 a week.

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11

Does anyone here work in the building trade or know those who do? 

Any word from the coal face? 

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0

More than 100 construction companies have been placed into liquidation so far this year and defaults (i.e., missed payments) are up 10% compared to same time in 2021. Across the country, 25% of all company liquidations in May were from the construction sector.

So things are hard at the moment.

https://www.centrix.co.nz/construction-sector-credit-scores-reflect-ris… 

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1

Up 10%. Doesn't seem too bad so far. 

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1

My Son works for a high end prefab business, they have 12 months work ahead of them. My business sells swimming pool related products, most of the guys building pools we deal with are in a similar position with 8 - 12 months work ahead of them, the growth we have seen this year is ridiculous, and completely unsustainable in my opinion. Next year will be telling I think. 

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3

Great to hear.

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0

Our builders just signed on about 8 people to build houses for, straight off plans he and his draughtsman mate created. Price? 2m each, 4 bedrooms but tiny sections.  Flat land, nearish to services, on the Kapiti Coast. Took barely any time to sell them as well, deposits paid and starting work already.

I just dunno how people are going to be able to afford those mortgages as rates rise.

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5

Thanks blobbles! Sounds like the building industry has not been hit broadly yet then? 

I cannot envisage a situation where they are not going to get hit, very hard, and soonish. 

They have signed the houses for 2 million but what if the banks won’t lend on the full amount when they build is completes? Presumably material issues are still also causing build times to blow out too? And then if interest rates have risen by completion will  the banks still lend as much or have the stomach for lending on the housing market in decline? 

In all the stories of the various housing market collapses, half completed builds, or new-builds sitting empty is often a very common feature. 

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1

Development of new housing is a subset of the construction industry, and it's been running mental for 2 years now. 

At the moment people falling over are doing so because of operating conditions (rising costs, increased completion times). It'd be later next year before any drop off in demand starts wiping out firms. 

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2

Son rang a firm for a bathroom upgrade - they said, 'what would you say if we said we couldn't get to you until February next year?'.  He said, oh - no - thanks, I'll carry on ringing around. But they asked him to let them come along to quote the job anyway. Which he was happy with.  Smart business. That's the way.

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1

Not sure why this should come as a sudden surprise to anyone, its been guaranteed for 6 months now. The hard part might be picking the top because the pain really starts when it gets into the 7's.

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2

I suspect most people will be fine till 8%+. The only exception will be those the banks move off interest only, and those with high DTIs.

I'm actually more concerned for OO who upgraded and took on massive DTIs because they had a large deposit from the previous sale, than I am for either FHB or investors. People talk about the FHB who got 7+ DTI, but (if I read the data aright), OO were far more skewed towards higher DTIs than either of the other groups.

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9

According to RBNZ C40 for 2021 . There were 2532 Other owner-occupiers without investment property collateral  (non FHB) borrowers with DTI >9. Borrowed a total of 2.04 billion for the year. 808 K  average each. They probably had decent equity when they traded up. That is why the banks approved the DTI. But they wont be able to sell now without taking a sizeable loss.

 

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7

Rates at 2015 levels and climbing as this run through the system house price’s will obviously drop back to 2015 levels.

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12

Ordinarily you would expect higher average incomes and higher build costs to hold prices somewhat above 2015 levels, but with emotions in play who really knows. 

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8

Not to much wage growth over last 7 year compared to house prices. In 2015 house price’s were over valued compared to average incomes now at around 10 x average wage couples income in Auckland this is crazy, I have had large price drops in UK but coming of this level with the amount of debt in housing and rates climbing this could be biggest housing crash in recent times 50% down would be just the start.

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14

There's been a big increase in incomes recently so a similar multiple from then makes sense. The problem is at 50%, housing costs are sensible for anyone coming in but there would be a huge collapse in discretionary spend as people dug themselves out a hole not of their making. 

I think we're about to see just how the flow-on effects of the RBNZ dropping the ball on their interest rate hikes effects their financial stability mandate - which at that point would be a total failure in all areas of responsibility and questions would need to be asked about what the point of the central banking system actually is. 

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6

DTRH

With rates at 2015 levels, house price’s could drop back to 2015 price-to-income levels, but I struggle to accept they would revert to 2015 nominal price level. However, looking at the median price-to-income levels charted on this site, this means a drop from 8.4 to 5.5, a 35% fall from end of July 2022 levels . But even that seems too much.

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1

Well yes there is logic to that, plus inflation over those years of course.

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1

2017 Average Auckland individual income 63K = 96K after tax and Kiwi Saver for a couple

2022 Allowing for 3% increase on 2021 average 74K = 111k after tax and KS for a couple.

So 15 K more a year in the hand per couple. A 700K mortgage will cost extra 17K per year to service interest based on 2.5% rate increase from previous fix 35K total interest per year. Plus every extra dollar they earn from now on will be taxed at 33%

Add the inflation effect on non discretionary items. Food, Fuel etc. Thousands of people are like Wile E Coyote running in mid air right now.   https://ecoprofile.infometrics.co.nz/auckland/StandardOfLiving/Earnings

 

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6

Thousands of dual-income households effectively going backwards, including many in previously comfortable middle class professions, some of whom will also still be carrying student debt in addition to this. 

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7

And many dual income couples paying up to 10k more tax than presented thanks to imbalanced incomes and the 'progressive' tax system.

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5

No worries they can just put off having kids for another 10 years. Or never. /sarc.

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8

 A one-way plane ticket is much cheaper in comparison.

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10

...and yet despite all these interest rate rises, why do some landlords think they can just keep "increasing" their rents, if their costs go up .....while with inflation the way it is today, renters costs are going up more ? 

No wonder young skilled Kiwis are saying "stuff this" my salary has been held down for years and now we have inflation, then some greedy landlord wants to put the rent up. 

If I was 23 again and was faced with what we are faced with now, I would be on the first plane to Aussie and create a life for myself and a future family ......and leave all these "property investors" to it and the social/ financial mess they are creating in NZ ! 

 

Up
24

The investors are selling down, and making the problem worse if you're an existing home owner. They get to cash out, but they'll only make a great capital gain, not a stupidly good one. 

It gives aspiring FHBs a shot but their ability to push for better wages are being unwound by the rush to reopen the border and reboot the population ponzi. Heaven forbid their wages actually increase in real terms. For existing owners it's going to be noodles and ketchup just to keep the place you've got if you're coming up for renewals. Which, you know, after years of living on the bones of your arse to save the deposit you just watched evaporate, is pretty hard to take. 

Going to be a pretty miserable place for the 30 - 40 year olds with family commitments who have to stay, but to anyone younger, the message is well and truly clear.

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7

For existing owners it's going to be noodles and ketchup just to keep the place you've got if you're coming up for renewals.

Not if the owner used the previous several years of insanely low interest rates to pay off their mortgage instead of buying boats and Audis.

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12

Exactly right. I am thinking maybe only the ones that have been in the game for 10 years or so, did exactly this, as they were rates never seen before and probably never again, so the opportunity to shore up your finances was there for the taking. 

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2

So you're saying the trick was simply to have been born earlier? Golly, what an idea, why didn't I think of that. 

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10

Being born this century is like joining a game of Monopoly someone has already won.

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25

Apparently it comes with free Audis and speedboats and there's no middle ground between renters or what appears to be America's Cup challenger levels of wealth. I don't know many friends who bought homes circa 2018 who immediately went out and bought a Q7 or a 40 foot launch but maybe they're just shy talking about it.

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0

Its a Ranger and a Jetski mostly.

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4

That is really good, thank you. :)

It feels like this is a real turning point, there will be a few that are ruined but there will be more that are able to eventually buy a house to raise a family.

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1

Unfortunately those who get ruined are going to be the same cohort of Kiwis, again and again and again. It'd be kind of funny if the outlook wasn't so grim. 

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0

try Somalia next time. 

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0

no did'nt say that, but maybe when people where saying this too good to be true, some should of listened. Plenty on this site where saying it at the time.

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2

You also had the RBNZ governor talking about negative rates and the Prime Minister saying people would not like to see their house prices drop in value, just go up slower, so appealing to authority is pretty pointless when there's a total failure to deliver on their mandate either way.

We're about to see if the 'financial stability' but comes into it (my guess is it will) but the RBNZ doesn't give a shit if you need to live off rice and soy sauce to keep your house. 

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6

Lets not be silly.

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2

They only need to goto Aus for 3 to 6 years for an OE and get some cash in the bank. 

Then in 2025-2028 they will be able to come back and snag a bargain house with their $AUD and settle their families near the beach. The private investors will all have bailed or gone bankrupt by then and the next upward property cycle wont really take hold til 2028-2030 (the property boom lasted nearly 10 years so probable the down cycle will be long and deeper than usual too, no huge wealthy/skilled immigration influx to bail us this time (too much competition for those peeps)

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6

Correct. If I was a young and skilled Kiwi, I would go to AU, rather than stay in NZ and subsidize the quickly depreciating asset of some parasitic housing specufestor, and then I would come back only after the NZ housing Ponzi has imploded. The only point where I would disagree with you is the wait of 3 to 6 years for the NZ housing market to unwind - I personally think it is going to be more like a 2 to 3 years wait, no longer than that.  

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13

yeh... it is happening fast.

I mean... lots of fun, but also a bit scary :D

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1

Yes crazy horse so many grandparents not seeing grandkids growing up, just once a year for holidays. I know a number of people who have moved to Aussie just to be close to family. This is what’s life is about, no harm in making money but like you said now it’s got to the point working families have no chance of owning a home and rent is so over the top you can’t blame young people for leaving.New Zealand is going to end up like eastborn in UK just old people the waiting room for God.

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12

Well, there's already been at least one case go through the Tenancy Tribunal where the landlord tried to increase the rent to cover the interest deductibility removal. They got told a flat 'no' - rent is determined by the market, not by your costs. But until recently, the market has had to bear whatever landlords wanted due to lack of availability. Which effectively made landlording a cartel, particularly when property managers were involved, as they all just increased in concert. Now there's a bit more competition, we're seeing rents drop, and I wish there was some provision in the law for tenants to force lower rents (if market prices dropping) at the yearly review, the same way landlords are allowed to force higher rents (if market prices rising). Unfortunately, all you can do is threaten to move somewhere else and hope the landlord listens, which is a difficult threat to follow through with due to the costs of moving. My last landlord is currently missing out on a month's rent while he waits for the new tenants to move in, who he managed to find at a lower rent than we were paying. That month's rent equates to a $60/week drop for the year, on top of the rent drop he had to do to get interest in the property. He's lost over 4k rental income for the year, and we only asked for a $15 ($750pa) drop!

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10

A landlord owns the property that is for rent, so until we remove the last vestiges of the capitalist system it is unlikely this dynamic will change.

We are close though, rent controls would in effect be that.  Rent controls have not worked to well elsewhere but there is always a first time.  People like myself would sell the rentals and buy into motels the rate of return on them at the moment is off the charts.

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1

Allowing one party in an agreed contract to forcefully change said contract value is not about capitalism or socialism - it's about enforcing class dynamics, and is a vestigial remnant of feudalism.

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8

That is not what is happening luckily.  The tenancy agreement has a term, normally 12 months and changes to the rent are allowed after this time.  (s24 Residential Tenancies Act) If the Tenant thinks the new rental amount is not the market rate, they can apply to the Tenancy Tribunal for an assessment and order for reduction if the Tribunal finds in their favour (s25).

Class dynamics, feudalism etc etc are not applicable.

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2

Yes. But as per s25(1) it has to be substantially out-of-line with market rent for the tenant to successfully challenge, whereas the landlord can increase by a small percentage and the tenant has no recourse. So a landlord can increase by a small amount, every year, and as long as it doesn't get too ridiculous, the tenant will have difficulty challenging it.

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3

^ this.

And for some tenants that small increase will mean that their kid can't have new shoes that year, or some other hardship.

That's when it starts looking a lot more like feudalism.

For wealthier tenants like me, it is easy to give the finger to a landlord, and move on if I want.   Among the poverty struck ones who are desperately just trying to raise their kids and keep a roof over their heads, many of them can't even afford the cost of moving, and do have to absorb whatever increases the "lord" decrees.

And then there is also the cartel of bloodsuckers (Eves, etc) who make it a regular practice to continually raise rents.  So a serf often has no place to hide.

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Landlords will just look down their nose at those poor tenants and paint them as unemployed octo-mums or dead beat druggies who need to make better life choices. But not their own tenants, no, the relationship with their tenants will be overly romanticized. 

It's a mutual, happy arrangement where the tenants are ecstatic to be charged well under market rent for a well maintained property.  The landlord will gloat about their tenant selection capabilities, but in the next breath claim that all tenants are ruthless numbskulls that punch holes in walls and urinate on the carpet.  

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The Fed will be trying to break inflation this year for sure. In our extreme world that means an extreme response which in turn will create an extreme reaction, which for most of us means a recession. The economic fundamentals & optics don't look great however, so don't discount something starting with a D. 

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The reserve banks can do nothing but raise rates until people are hurting and output and prices fall. Which will likely be a crash of some form due to the rate of the rate hikes. Plenty will get burned.

UK is getting hit first and hardest. The New UK prime minister plan to borrow $100b to cap peoples energy bills - to limit voter deaths and hardship in winter. As a result UK Govt debt is now astronomical - so when things bite and taxes fall we can expect government spending to get slashed (next year... ) austerity and house price crash all over again.

Stock up on popcorn - the new gold!

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I think it's too close to the end of the year. My guess is they think interest rates need to go significantly higher than they've thus far signaled, and don't expect their measures to have any meaningful effect till mid-late next year at the earliest.

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Rounds on target. Fed fire for effect. Speculative assets are about to FOOP themselves.

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The stars are aligning certainly, the traditional October share market wobbles might be epic this year.

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As long as pay rates keep rising, interest rates will have to rise further. 

A good summary here from Ray Dalio: Where We Are in the Big Cycle of Money, Credit, Debt, and Economic Activity and the Changing Value of Money | LinkedIn

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Personally, I don’t think that Dalio goes far enough in using history to understand the big economic cycle. He has the recency bias of only going back to the most recent European empires! 

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500 years should be enough to see the 70 year pattern. Which historic events would be more relevant?

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Lol the comments after a +16bps & +6bps increase are hilarious... it was pretty quiet when some banks recently dropped long term rates.

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I can't deny that there is some confirmation bias involved, you are not wrong.

For me the direction is clear anyways. Even if I have to admit that I prefer a long slow controlled event... while the one we are assisting is brutal and fast.

I would be happy with a -65% in 3 years, and ocr at 5% longterm. At that point it would be easier to regulate the market properly, or to deregulate it better. 

Right now is a mix of Wild West and Feudalism, the worst of both worlds

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Well, the banks are running fairly healthy margins. I observed the drops as a reflection of competition to get the healthiest loans on the books, whilst the overall trend is up - aside from those drops just before the MPC meeting where it seemed like they were just trying to bluff the RB into not raising.

On the other hand, if there was consistent drops across the board, and there wasn't the threat of further rate rises around the world, maybe there'd be something to talk about?

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Yes, that's my take as well.  Shore up the loan book as a hedge against potential defaults.  Not sure about bluffing the RBNZ into not raising - bank's margins increase with the interest rate, so (apart from potential defaults) you would think they'd be happy about that.

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Those recent drops to 4.99% for 1 year happened when the 1 year swap rate was 3.25%. It is now 3.88% so expect those rates to reset upwards to about 5.6% real soon. 

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Man if you get a chance to listen to bernard hickey talking to Jamie Mackay, do it. Will blow out DGM brains

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Taking financial advice from Bernard Hickey is like taking medical advice from a naturopath.

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Speaking of which, BH hasn't been seen with an article for at least a week IIRC. Either something epic's going on or...something

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Oh it's worse.  They paid hundreds of dollars for it.

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The forceful intervention from Lael Brainard, vice-chair of the Fed, generally generally seen as a dove on monetary policy, reinforced expectations that the central bank would opt for a third consecutive 0.75 percentage point rate rise at its meeting later this month. “We are in this for as long as it takes to get inflation down,” she said. Brainard said the Fed had “both the capacity and responsibility” to maintain public confidence in its ability to keep inflation in check in the long run, adding higher rates that restrict the economy would be necessary “for some time”.

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And it has been 22-23 years since inflation was this high.  So interest rates need to go a lot higher yet.

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a developing trend where the rate curves are flattening (ASB 1 yr 5.15% - 5 yrs 5.79%)

What does a flattening interest rate curve tell you ?

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Doesn't tell me much Yvil because unless someone on here knows exactly how high the FED is going to go with rates, everyone is just guessing. The fear is now that everyone being tortured will be screaming ok you can stop now and the FED just keeps going.

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‘A flat yield curve is typically an indication that investors and traders are worried about the macroeconomic outlook. One reason the yield curve may flatten is market participants may be expecting inflation to decrease or the Federal Reserve to raise the federal funds rate in the near term’

https://www.investopedia.com/terms/f/flatyieldcurve.asp

 

 

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