Key Takeaways
- Mortgage rates have been trimmed by Heartland Bank and Avanti Finance, but fixed rate cuts are unlikely due to current swap rates.
- Term deposit rates have been reduced, with Squirrel cutting its on-call account rate to 2.0%.
- Residential building consents are on the rise, but non-residential consents are still in decline.
- The NZX50 index is down 0.3% as of 3pm, with market heavyweights like F&P Healthcare seeing gains.
- Kiwibank is seeking more Tier 2 capital via unsecured subordinated notes, with an expected gross cost of over 5.1%.
- Record trading in the May 2036 NZGB has pushed total turnover in NZGBs to a record high of $121.3 billion.
Introduction to Mortgage Rate Changes
Mortgage rates have seen some changes, with Heartland Bank and Avanti Finance trimming their floating rates. However, the swap rate chart suggests that fixed rate cuts are unlikely in the near future. This is due to the current swap rates, which indicate that banks are not expecting to cut fixed rates anytime soon. Despite this, it’s still possible for borrowers to compare mortgage offers and find the best deals using a mortgage calculator that takes into account other costs and cashback incentives.
Term Deposit and Savings Rate Changes
Term deposit rates have also seen some reductions, with Squirrel cutting its on-call account rate to 2.0%. This reduction is likely to be followed by other banks, with at least one more bank expected to reduce its term deposit rates tomorrow. It’s essential for savers to keep an eye on term deposit rates and compare them to find the best deals. The updated term deposit rates can be found online, with rates less than 1 year and 1-5 years available for comparison.
Residential and Non-Residential Building Consents
Residential building consents have seen an increase in October, especially for townhouses. However, non-residential consents are still in decline, indicating a slowdown in commercial construction. While residential building work is expected to pick up next year, the outlook for non-residential work is not as positive. This could have implications for the construction industry and the overall economy.
Housing Confidence and the NZX50 Index
ASB’s survey has shown that housing confidence is at a 15-year high, with nearly one-third of respondents saying it’s a good time to buy property. The survey also indicates that the majority of respondents expect further drops in mortgage rates, but house price expectations remain modest. Meanwhile, the NZX50 index is down 0.3% as of 3pm, with market heavyweights like F&P Healthcare seeing gains. The index is down 0.6% over the past five working days but is still up 2.8% year-to-date.
Kiwibank’s Tier 2 Capital and Record Trading in NZGBs
Kiwibank is seeking more Tier 2 capital via unsecured subordinated notes, with an expected gross cost of over 5.1%. This is higher than the bank’s five-year term deposit rate, which is 4.00%. The notes will be used as loss-absorbing capital and come with a higher level of risk. In other news, record trading in the May 2036 NZGB has pushed total turnover in NZGBs to a record high of $121.3 billion. This is a significant increase from the previous record high of $82.8 billion.
Australian Market and Economic Updates
The Australian market has seen some updates, with the Melbourne Institute inflation gauge rising again and exceeding the RBA’s 2-3% inflation target range. However, the official October CPI rate was higher at 3.8%. The Cotality house price tracking has seen a slight softening, with a 1.0% gain in November. Annual growth has lifted to 7.1%, but quarterly gains are tracking a 13.2% annualized pace. The ASX200 is down 0.3% in afternoon trade, while the Australian 10-year bond yield is up 2 bps at 4.55%.
Global Market Updates and Currency Performance
The global market has seen some mixed performance, with the local equity market down 0.5% in Monday trade. The Tokyo market is down 1.4% in its opening trade, while Hong Kong and Shanghai are up 1.1% and 0.3%, respectively. The Kiwi dollar is essentially unchanged, still at 57.4 USc. Against the Aussie, the Kiwi dollar is holding at 87.6 AUc, while against the euro, it’s little-changed at 49.4 euro cents. The TWI-5 is at just under 62 and also little-changed. The bitcoin price has dropped sharply, down 5.0% from this morning, while gold is up US$23/oz from this morning, now at US$4241/oz.