Here are the key things you need to know before you leave work today. (We are slightly earlier today so you can get a jump on the traffic.)
MORTGAGE RATE CHANGES
Westpac raised its one year fixed rate by +10 bps to 4.59% today. AMP Home Loans advised that their fixed rates will go up by between +14 bp and 21 bp across most fixed terms on Monday (yes, Monday, not Tuesday). Because this is a channel managed by Kiwibank, it seems reasonable to guess that Kiwibank rates will rise by similar amounts soon too. Heartland Bank has entered the home loan market with a 5.65% floating rate offer.
DEPOSIT RATE CHANGES
The Police Credit Union cut their bonus saver rates from a potential of 3.00% to 2.80%. Asset Finance increased its 18 month rate by +10 bps to 4.40% today.
LOW VOLUMES RISK FUTURE CAPITAL GAINS
Barfoot & Thompson’s January sales volumes down were down -30% compared to last year’s January. Only 629 properties were sold. In a normal 2016 month that level was 1,000. Still, median and average prices remained flat. The last time a January was this low (2011), prices slipped inconsistently for six months or so.
PAYOUT UNDER PRESSURE
We have the next dairy auction on Wednesday, February 8, 2017. Dairy derivative activity suggests it will be a bit of a surprise if prices in USD manage to hold current levels. The risk is downside. Today’ the USDA updated its Oceania market survey and most items were level-pegging, although butter prices did rise. But these USDA prices in NZD reveal notably lower prices as our currency holds high.
The ANZ Commodity Price Index dipped -0.1% month-on-month in January, led by weakness in a few components, particularly wool products and whole milk powder. However, broad-based gains were evident elsewhere, with 10 of 17 commodities rising. The index is +19% higher than this time last year. In NZD terms however, it is up just half that at +9%.
HAVE CASH, WILL SPEND
However, prospects of a lower payout are holding no-one back from buying a new car. Economic optimism is translating into car buying, aided no doubt by the high currency. The January data out today revealed the strongest buying level ever for a January and for the first time, more than 10,000 new cars were sold in a January. Records were also broken for commercial vehicle sales. We are awaiting the used imports data. 40% of all January new vehicle sales were for SUVs. We should note that the “consumer lending” category reported by the RBNZ which includes personal loans, car loans, and credit cards, is the slowest growing type of debt in the local world of finance. It was up only +4.1% in the year to December.
COAL MINE CLOSURE PERMANENT
Despite an exhaustive sales process Solid Energy has been unsuccessful in securing a buyer for its Spring Creek Mine and it will now be formally closed. Spring Creek Mine has been in care and maintenance since 2012 when production was stopped following a review of the mine’s economic viability. Volatile coal market conditions along with with the significant capital required to get the mine back into operation killed it.
WHOLESALE RATES SLIP
All terms from the 90 day bank bill rate through to swap rates 1-4 years are -1 bp lower today. Terms longer are unchanged.
NZ DOLLAR STAYS HIGH
Despite some earlier softness the Kiwi dollar has now regained any slippage. The NZD is back at 73 USc. On the cross rates, we are at 95.2 AUc, and at 67.7 euro cents. The TWI-5 index is still at 78.1. Check our real-time charts here.
You can now see an animation of this chart. Click on it, or click here.