Interest rates NZ

2022 - 4 - 4

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What happened Monday (Interest.co.nz)

A review of things you need to know before you go home on Monday; more big home loan rate rises, term deposit rises, Infrastructure Commission knows why, ...

That means the TWI-5 is now at 74.5. We report economic news, but it is in the shadows today as the scale of the barbarity is revealed as Russian forces pull back from the Kyiv region. Even the Murdoch press seems resigned to the likelihood Scott Morrison can't make a miracle comeback this time - because he seems to be the weak link in all of this. Bank of China raised all their fixed rates, including their one year, but that is now up +20 bps to only 3.85%. The Police Credit Union set their one year fixed rate at 4.40% - and also launched a new reverse mortgage product, at 5.75%, (below SBS Bank's equivalent at 5.85% and well below Heartland Bank at 6.45%). The S&P500 futures suggest Wall Street will open tomorrow down a minor -0.1%. The ASX200 is up +0.3% in midday Monday trade. The NZX50 is down a mere -0.1% in late afternoon trade today. It said town planning moved away from facilitating growth to maintaining character of existing suburbs leading to a reduction in housing supply, and that strangled supply for decades. Tokyo has opened flat in early trade. March was the first time ever they posted more than 250,000 job ads. Away from the carnage, FPH, IFT and SPK have all posted outsized gains today. Today it was Kiwibank who raised many fixed rates - but not their one year 3.99% rate.

Is this the new normal? Bank lifts home loan rates near 7 per cent (Stuff.co.nz)

Kiwibank is increasing the interest rates charged on a number of its home loan terms, as homeowners face the prospect of more expensive mortgages than ...

“But with expectations that it could now get up to 3 per cent to 3.5 per cent next year, the predicted trajectory is affecting the longer-term rates. Kiwibank has increased its two-year standard rate from 5.55 per cent to 5.85 per cent. In February this year, it was 5.47 per cent. Another $100b will refix within six months to a year. Reserve Bank data shows five-year rates have not been that high since mid-2014. Our current expectation is that five-year fixed rates peak at about 6 per cent in the first half of next year, but there are still some upside risks to that outlook.” This modal can be closed by pressing the Escape key or activating the close button.What's required under the new CCCFA rules? In March 2021, the average five-year rate being taken out by borrowers was 3.78 per cent. For three-year terms, its special rate and standard rates each lift 20 basis points respectively, to 4.99 per cent and 5.99 per cent. Its standard five-year rate is now 6.79 per cent, up from 6.16 per cent previously. Its special lifts from 4.55 per cent to 4.85 per cent. Beginning of dialog window.

Kiwi dollar set to defy deteriorating NZ economic outlook (Interest.co.nz)

Roger J Kerr says it appears that the speculative buying of the Kiwi dollar, that has dominated the local forex market recently, has run out of some steam.

Add on an immigration policy “re-set” that is designed to limit immigration numbers coming in at precisely the time we have severe labour shortages across all industries and a brain drain to Australia, makes one realise just how out of touch with the real world they are. Appallingly low business confidence survey levels are already sending a message that the business community have no confidence that general economic conditions will improve anytime soon. Today, the Australian FX markets are pricing-in inevitable Australian interest rate increases later this year and betting that the RBA will be forced to change their monetary policy stance. However, the AUD is moving in the opposite direction against the USD, therefore it is only a matter of time before these remaining speculators are also “stopped-out” to prevent them from incurring even larger losses as the AUD appreciates. Their selection of an Aussie private sector consortium lead who had a dodgy track-record in the first place raises serious questions about competency. In contrast, our lot in central and local government continue to bicker and argue over petty/parochial patches of turf and always seem to miss-trust private business initiatives. It is a good lesson in how FX markets price the future in advance, today. It is entirely understandable that they might be some profit-taking (i.e. NZD selling) by market participants after a four cent appreciation of the NZ unit over the last two months. CFTC/COT futures data to 27 March shows that AUD short-sold speculative positions had reduced from 100,000 futures contracts (USD10 billion) at the start of March to 50,000 contracts last week. It will be another month of a whopping trade surplus (exports>imports) of over AUD10 billion. The exact timing of this change was never certain, but it looks like it has finally arrived. Local fund managers with offshore equity portfolios denominated in USD’s need to protect their client’s investment returns against widely-expected and general USD currency depreciation over the next 12 months.

Volatility brings opportunity (Interest.co.nz)

Sensing an opportunity, BNZ holds back on part of their home loan rate increases, opening up a gap between them and ANZ/ASB. The pace of swap rate increases ...

New to interest.co.nz? We are in a drive to build our resilience. At today's swap rate, that is a margin of just +115 bps (3.99% less 2.84%), an unusually low net interest margin (NIM) level for any bank. But break fees should be minimal in a rising market. (Term deposit rates can be assessed using this calculator). In fact the two year swap rate reached 3.41% yesterday, the highest in seven years. The one year swap is now its highest in seven years as well at 2.84%.

Mortgage rates might have already peaked in New Zealand, expert ... (Newshub)