Bank of New Zealand

Can’t wait for Twyford to decry this good news

Mortgage interest rates are now the lowest they have been for 60 years.

No doubt Phil Twyford will tell us this is awful and Labour will be moving to raise those interest rates.

Mortgage rates have hit a 60-year low as banks vie to undercut each other.

BNZ today shaved 30 basis points off its two-year fixed rate, down to 4.69 per cent.

Statistics New Zealand data shows commercial banks’ mortgage rates have not been so low since 1955.

BNZ’s move follows the Reserve Bank’s cut to the official cash rate by 25 basis points to 3 per cent last Thursday.

BNZ’s new rate undercuts SBS Bank’s 4.85 per cent 18 month rate.

Interest.co.nz said the rate was available to BNZ customers who had at least 20 per cent equity in their property and who had a BNZ account receiving salary or wages.

Massey University banking expert David Tripe said BNZ’s new rate was “probably somewhere near where rates ought to be”. ?? Read more »

Well, doesn’t this just spoil the narrative that National only looks after its rich mates

The government has announced an initiative to assist?the poor with interest-free and low-interest loans to low-income borrowers that banks don’t normally lend to.

Helping the poor?

Pity the narrative doesn’t fit with Labour’s claims of helping rich mates….

A Government initiative will offer interest-free and low-interest loans to low-income borrowers banks don’t normally lend to.

BNZ announced today it would commit $10 million to a community finance initiative in partnership with the Government, Good Shepherd NZ and The Salvation Army.

BNZ spokesperson Michelle van Gaalen said the programme, to start with a one-year pilot, was designed to help people become self-sufficient and get away from using payday lenders and loan sharks.

“BNZ wants to help all New Zealanders be good with money, including those who currently don’t have access to conventional sources of credit,” van Gaalen said.

“Traditionally banks haven’t provided loans to customers with minimal income, so those people have been using the only other option they feel they have – borrowing at extortionate rates.”

BNZ will draw on the experience of its parent National Australia Bank which has been running a successful community finance programme for more than 10 years.? Read more »

BNZ warns Labour over their “big tool”

It looks like the BNZ is not at all keen on having Labour’s new “big tool” deployed.

Their Chief Economist Tony Alexander has issued a warning to Labour that their much vaunted policy won’t work as intended.

Labour’s plan to use KiwiSaver as a monetary policy tool would force investors into buying more shares when prices are high and fewer when they are low, Bank of New Zealand chief economist Tony Alexander has warned.

The proposal from Labour, unveiled earlier this week, was for KiwiSaver to be made compulsory, and the minimum contribution rate lifted or dropped as a means of influencing the pace of household spending growth.

It was billed as an alternative tool to using interest rates to dampen or stimulate economic activity in the economy, and therefore inflation.

But in his weekly newsletter, Alexander has warned about its potential pitfalls, including lifting volatility on the sharemarket.

Alexander said: “The policy would boost Kiwisaver contributions when the economy was booming and presumably asset prices like shares rising firmly and at high levels. The tightening of monetary policy would lead to more asset buying out of the contributions and this would amplify the equity price cycle while forcing people to buy more when equity prices are high.”? Read more »

Kiwibank successful at keeping banking costs down? Apparently not.

One of Labour’s big claims and justifications for them deciding to launch an insurance company to compete with the other 96 insurance companies in New Zealand was that Kiwibank had done a wonderful job of keeping banking costs down.

Hmmm…the NZ Herald reports something altogether different from Labour’s claims.

New Zealand’s big four banks collectively made more than $3.5 billion of profit in the last year in another record year for the sector.

Profits grew more than 9 per cent on 2011/12 – a boost of $303 million across the ANZ, Westpac, ASB and BNZ.

John Kensington, head of financial services at KPMG, said loan growth, lower funding costs and less pressure in competing for deposits had helped boost the bank profits.

At the same time the banks had also managed to keep a tight lid on costs while holding on to their margins. ? Read more »

It’s the economy stupid, Ctd

Another good result?for the economy after last week’s strong data.

New Zealand’s services sector registered its highest level of activity since October 2012 in July, led by new orders and strength in the northern region.

The?BNZ-Business New Zealand Performance of Services Index?rose to 58.1 last month, up three points from June and from 52.2 in July last year. It is the highest reading for July compared to a year earlier since the survey began in 2007. A reading above 50 indicates expansion in activity.

The PSI follows the release last week of its sister survey, the performance of manufacturing index, which rose to a nine-year high in July, with production and new orders leading the charge.

“Combined they point to GDP growth quickening to quite a strong pace,” said Craig Ebert, economist at Bank of New Zealand. ? Read more »