A review of things you need to know before you go home Friday; affordability improves in NZ, worsens in AU, hydro lakes stabilise, minnow financial statements, swaps stable, NZD slips

Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
No changes to report today.

DEPOSIT RATE CHANGES
There are none to report here either.

HARMONEY CUTS BORROWER INTEREST RATES
In case you missed this update which we included late yesterday, Harmoney is cutting interest rates for people who borrow money through its website. The peer-to-peer lender says from August 3 all new loan applications will be assessed with its “new generation scorecard.” Borrower interest rates will drop across Harmoney’s risk grades A1-F5 to between 6.99% p.a. and 29.99% p.a. from between 9.99% and 39.99% now. Harmoney says this reflects “the underlying risk and improved ability to price risk.”

AFFORDABILITY IMPROVES IN NEW ZEALAND
Home loan affordability is improving in New Zealand. Falling house prices around NZ bring home ownership a step closer for first homes buyers, but they’d still struggle to get on the property ladder in Auckland or Queenstown. Pukekohe and Franklin are the only affordable parts of Auckland.

AFFORDABILITY WORSENS IN AUSTRALIA
The Australian HIA Affordability Index shows Housing affordability in Australia continued to decline in the June quarter . This is largely due to a rise in the median dwelling price of +9.1% per cent to a record high of AU$540,200. NSW was the most significant negative influence on this result with affordability in Sydney now declining past a critical level, HIA said. Acquiring and servicing a mortgage on a house in Sydney now requires more than two standard Sydney incomes. Sydney is the only market to have achieved this outcome in the 15 year history of this report.

GREEN BOND RAISES NZ$125 MLN
International Finance Corporation’s 10-year green Kauri bond, detailed yesterday, has raised NZ$125 million and has a coupon of 3.75%.

TORQUE BEATS [POLLUTION] TALK
Diesel power for vehicles is getting a [well-deserved?] bad reputation, with car companies cheating the emissions system, and European cities going backwards with particulate pollution. But diesel-boosters in the car industry have changed our buying habits, and more of these polluters are on the roads today than ever before. New data out in Australia today shows that diesel power is now 22.2% of their vehicle fleet, up from 15.9% just five years ago. Torque is beating talk in the vehicle market.

THE CUZZIES HAVE A PROBLEM
And staying in Australia, their competition regulator is accusing their state and territory governments of price gouging when it comes to supplying households with electricity. Prices have been rocketing up over there in 2017, and that is on top of +10% rises per year in the five years to 2013. Some say it related to the dive to base their supply on renewables. But the ACCC clearly thinks public policy positions are behind the moves that have had no regard to affordability. The Aussie situation compares with a New Zealand one where retail electricity prices rose +2% in the past year, and lines charges also rose +2% in the same period.

A LOCAL UPDATE
Of course we are very dependent on hydro, and when our lakes get low, as we reported two weeks ago, our prices could spike as well. The latest data from the NZX Daily Hydrology Report suggests things are turning better with a recent rise in lake inflows, and a commensurate rise in lake levels.

BANKS LEAD ASX DOWN
It’s been a tough old day on the sharemarkets. The NZX50 is currently down -0.8% and across the ditch they are down -1.4%. Everywhere else in out time zone is down varying degrees (except Shanghai which is unchanged), but the ASX drop is the standout today. Sharp falls in the price of bank shares.

FIRST LOOKS
There have been some financial statement releases for some smaller financial insitutions today, from Finance Direct (where profits fell), Squirrel Money (which made a big first year loss), and Lending Crowd (which broke even in its first year).

WHOLESALE RATES STABLE
Theer have been no changes to local swap rates today. The 2-10 curve is still at +107 bps which is +10 bps more than the equivalent Aussie swap 2-10 curve. The 90 day bank bill rate is unchanged at 1.94%.

NZ DOLLAR SLIPS
The Kiwi dollar is lower than at this time yesterday, but unchanged from this morning, at 74.9 USc. On the cross rates we are also stable at 94 AUc and at 64.1 euro cents. The TWI-5 is at 77.6. The bitcoin price is up +6.2% from this time yesterday at US$2,709.

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