What happened on Wednesday | interest.co.nz
Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
ANZ was the first to raise its rates by +15 bps. Kiwibank raised them by +25 bps. Following here. ASB has said it will keep the corporate interest rate unchanged until the end of 2021.
CHANGES IN TERM DEPT RATES
ANZ has also raised the rates on some savings accounts by 5 to 10 basis points. Kiwibank raised rates from 10 to 45 basis points.
The OCR was raised from + 0.25% to 0.50%, the first increase in seven years. here is the RBNZ statement. here is our review of what this means. Expect floating mortgage rates to rise + 0.25% as a result. The currency appreciated by +20 bps immediately after the announcement. Wholesale interest rates rose +2bp across the curve within minutes of the announcement. The NZX50 ignored the change. The general reaction is modestly hawkish. The location where everyone has settled since is shown below. But one fact remains; this is only the first of their increases.
‘FAILURE TO BEHAVIOR LIKE A RESPONSIBLE LENDER‘
The Trade Commission has extracted a binding agreement with moola.co.nz, based in Christchurch, who admits failing to behave as a responsible lender. Moola.co.nz is controlled by NZ Fintech, itself owned by Edward Recordan. Other brands include needcashtoday.co.nz and zooma.co.nz. NZ Fintech is currently a major advertiser on NZ Herald (print and online) and other media where they offer “Wholesale Investment Opportunities – 5.5 – 14% pa returns”. He also in the Deloitte Fast50.
HAWKESBY steps up at RBNZ
Christian Hawkesby will succeed Geoff Bascand as Deputy Governor of the Reserve Bank when Bascand leaves in January. Hawkesby is currently Deputy Governor and Managing Director of Economics, Financial Markets and Banking. Hawkesby will assume the lead in financial stability when he succeeds Bascand and will remain a member of the Monetary Policy Committee. RBNZ says a replacement MPC member, replacing Bascand, will be appointed in due course.
The price of dairy products remained unchanged during today GDT auction – in US dollars at least. In New Zealand dollars, they increased by + 0.5%.
Less than 24 hours after the last RBA meeting declaration noted the importance of loan sustainability buffers, APRA has announcement an increase in “the minimum interest rate cushion that it expects banks to use to assess the viability of mortgage loan applications.” It progresses from +50 bps to 3.0%. APRA estimates that “a 50 basis point increase in the sustainability buffer will reduce the maximum borrowing capacity of the typical borrower by about 5%.”
DECEPTION ON THE RISE TRACED
The scale of Internet deception is widening. More and more people are being targeted and more and more people are falling into the trap of increasing sophistication. Westpac has a useful summary.
In Australia, their tax office is tightening the scrutiny of increasingly popular exchange-traded funds (ETFs) over concerns over non-compliance with reporting capital gains on sales of shares and dividend and distribution income.
CHANGED PANDEMIC PRESSURE
Stay in Australia, the Delta explosion case in victoria rose to 1,420 cases reported today in a “very serious jump”. There are now 14,410 active cases in the state. In NSW there was another 594 new community cases reported today with another 423 not attributed to known clusters. They now have 8,195 active locally acquired cases, which is less, but they had 11 deaths yesterday. Queensland is now report zero new cases. ACT has 28 new cases. Overall in Australia, over 57% of eligible Australians are fully vaccinated, and 23% have only had one injection so far. There was two new cases in New Zealand at the border, and 39 more in the community and one new death. So far 50% of eligible Kiwis now have both hits, another 30% the initial hit. So far, New Zealand’s vaccination effort is weakening slightly (79.8% of Kiwis and increasing more slowly) and the Aussie is also slowing with theirs now rising to 79.9%.
Compared to where this time around yesterday, the price of gold is down -US $ 7 to US $ 1,757 / oz in early Asian trading. And it’s down $ -3 from the New York market close earlier today, but up $ 4 from the London patch.
The S & P500 ended its Tuesday session up + 1.1% on Wall Street. The Tokyo market opened today higher, but then fell and is currently down -0.3%. Hong Kong opened down -0.2%. Shanghai misses all of this on vacation and won’t reopen until Friday. The ASX200 is down -0.3% at the start of the afternoon. However, the NZX50 is up + 0.2% at the end of the session here.
SWAP RATES & MIXED BONDS
We do not yet have today’s swap closing rates. They probably increased in a flattening configuration but the 1 year rate will be up +3 bps, the 2 year less. We’ll update this if there are significantly different changes when the end-of-day data arrives. The 90-day bank note rate was up + 2bp to 0.64%. The benchmark ten-year Australian government rate is now at 1.51% and up +3 basis points from the same time yesterday. The China Govt 10yr is now at 2.89% and unchanged. The 10-year New Zealand government rate is now at 2.03%, (+3 bps) and is back above the previous RBNZ rate for that rate at 1.99% (+1 bps), but this predates the OCR decision. The ten-year US government is now at 1.55% and up +7 basis points from same time yesterday.
NZ DOLLAR LITTLE CHANGED
The Kiwi dollar is now back at 69.4 USc after hitting 69.8 USc immediately after the OCR news. Against the Aussie, we also hold 95.5 AUc. Against the euro, we are firm at 59.9 euro cents. The TWI-5 is now still at 73.1 after the OCR wave, and back in the middle of the 72-74 range we’ve been in for most of the past eleven months.
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BITCOIN MORE FIRM
The price of bitcoin is now at US $ 51,169 and + 4.0% above what we were yesterday this time around. Volatility over the past 24 hours has been moderate to just +/- 2.8%.
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