Official cash rate

Banking expert lashes Little

andrew little labour leader

Andrew Little is copping an absolute lashing for his ill-conceived attack on banks.

Now banking experts are weighing into the?argument…and that isn’t good for Andrew Little.

Andrew Little has a ?lack of understanding of how banks and the system works,? a banking expert says. ? Read more »

Bill and John?s 4th term is looking dicey, and so are the tax cuts

Economy, economy, economy.

National have had the benefit of a well performing one for the last 2 election results, but unless that milk market perks up, they?re staring down a very tricky campaign in 2017.

New Zealand’s central bank has warned that a prolonged slump in dairy prices could get worse, forcing interest rates down to maintain growth in the farm-reliant economy.

Reserve Bank of New Zealand governor Graeme Wheeler said today the price of whole milk powder had plummeted 63 percent since February 2014 and was still under pressure.

“High stockpiles of whole milk powder in China, the increase in global milk supply, and the trade diversion issues involving Russia make for a very uncertain future, with the potential for further downward pressure on global dairy prices,” he said.

The Reserve Bank keeps a close eye on milk prices because New Zealand is the world’s largest dairy exporter, selling some NZ$15 billion a year, about a third of the country’s entire exports. ? Read more »

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 »

Reserve Bank told off for micromanaging mortgage market – and failing

The?Reserve Bank copped a kicking from treasury for their failed meddling in the mortgage market.

Not only was it unnecessary it also failed.

The Reserve Bank has been told to stick to its knitting by the Treasury, with officials warning that rules on mortgage borrowing need to be within its mandate.

In documents released on Thursday evening, Treasury officials also warned that the original loan to value restrictions put in place by the Reserve Bank may have led to more activity by property investors. It follows numerous claims that the rules have hurt first time buyers.

In a briefing for Secretary to the Treasury Gabriel Makhlouf, officials said they agreed with the Reserve Bank that a pick-up on the Auckland housing market “could potentially pose a threat to financial stability” in the coming years.

“However, Treasury has been engaging with the RBNZ to suggest that although we accept that house price changes can have macroeconomic implications, the RBNZ’s mandate is focused on promoting financial stability, and therefore the policy proposals should be reframed to focus more clearly on reducing systemic risk rather than asset prices.”

The comments appear to suggest the Reserve Bank is being warned that it may be overstepping its role over financial stability, a claim made in recent months by Michael Reddell, a senior adviser to the bank who was made redundant earlier this year. ? Read more »

Phil Twyford must feel a bit of a goose today

Should really be a double face-palm

Should really be a double face-palm

Phil Twyford was last week moaning about interest rates and blaming the government for supposedly high interest rates.

He of course ignored history that clearly shows high interest rates are a problem that Labour governments foist on Kiwi voters.

Well today the Reserve Bank lowered?the official cash rate and the banks have all moved to drop their mortgage rates too.

Banks have slashed mortgage rates this morning in reaction to the Reserve Bank cutting the Official Cash Rate to 3.25 per cent.

ANZ, ASB, Kiwibank, and Co-operative Bank all immediately dropped their floating mortgage rates.

Other major lenders are expected to follow suit.? Read more »

Twyford ignores Labour’s own history with interest rates

Phil Twyford is trying to blame interest rates for the so-called housing crisis.

The average Kiwi household is $250 a year worse off because the Auckland housing boom has kept interest rates high, Labour has claimed.

With the Reserve Bank due to revise its 3.5 per cent official cash rate (OCR) on Thursday, Labour housing spokesman Phil Twyford has issued figures showing an across the board 0.5 cut would provide an immediate $725 million boost.

He says the analysis ? which he admits is an assumption, given all interest rates would not immediately respond in a uniform way ? reinforces his criticism of National?s ?abject failure? to control soaring prices or build enough affordable housing.

?This is money that is currently going to offshore lenders. The whole country ? households, consumers and businesses ? are paying the price of the Government?s failure to fix the Auckland housing crisis,? Twyford said.

Which kind of ignores Labour’s recent history on interest rates.

David Farrar takes a break from arts reviews to point out the hypocrisy of Twyford’s statements.

Let?s have a look at the history of the OCR:

ocr-560x366

Yeah that 3.5% is just killing businesses and households. Labour never had it below 4.5% and even had it above 8% until they crashed the economy into recession (before the GFC struck).

Read more »

×