OCR 30 April 2009

What will the RBNZ do on 30 April?

Nice - but they're not bundled?

pipe42 Wrote:
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> Nice - but they're not bundled?


They are now and I made a nice sum on it just after the OCR news today

Nice! I was on my way to work :-(

I can't believe how well-priced this contract is at the moment...sadly no opportunities at all!

ANZ National has bumped up its fixed interrest rates for 3 , 4 and 5 year mortgages, 3 yr rate from 5.99 to 6.15, 4 yr from 6.40 to 6.55, 5 yr from 6.5 bto 6.75. When the ocr has dropped from 8.25 to 3%. If the ocr is dropped again, isnt it giving banks a bigger margin?

I think it is giving banks a bigger margin. However it is costing the bank to get money because investors are demanding a better interest rates from the bank. A lot of people will start investing in bonds because they give you a 8.50% return.

Financial markets today pricing exactly 26bps for the 30 April meeting. If RBA pauses again on 2 April as seems increasingly likely (especially if equity mkts continue to rally) then its hard to see the RBNZ doing more than 25bps absent something that really changes the picture in a negative way. So Ipredict mkt for the RBNZ doesn't look too badly priced. The mkt for the RBA is another issue.

Do you have a link Legs?

A. S . B lifts rates, 4 yr to 7.15, 5 yr to 7.25.....

"Demand for longer-term fixed-rate mortgages has soared in the past two or three weeks, apparently reflecting a belief that Dr Bollard has almost done his dash in rate cuts and will soon start raising the official cash rate."

[www.nzherald.co.nz]

The number of mortgage approvals issued by the banks last week rose 73% compared with the same week a year earlier. These stats only include refinancing where this takes place with a different bank to the one with which your current mortgage resides. Seems litttle doubt that activity in the housing market is picking up. Data from the various real estate agencies should confirm this over the next couple of weeks. Therefore its not obvious to me that rates need to be even lower still, but a 25bp cut still seems very very likely (although 30 April is a long long long way away!).

[www.rbnz.govt.nz]

I am ridiculously happy that the INCR stock is trading at half a cent!

Also from the good news department....

>>>>>>>>
WELLINGTON, April 2 (Reuters) - International dairy prices have risen for the second month in a row, New Zealand's Fonterra Cooperative Group Ltd said on Thursday, in the latest sign that the global market may be stabilising.
Fonterra, the world's biggest dairy exporter, said the average selling price for whole milk powder (WMP) in an Internet auction that concluded on April 1 was $2,235 a metric tonne, up 3.6 percent on a month ago.
That compared with a 16.6 percent rise at March's auction and an 8.8 percent drop in February. Prices had been falling since the auctions were started in July last year.
Full details of the auction are available at www.globaldairytrade.info.
"The firmer prices we're seeing are encouraging and indicate that supply and demand fundamentals are coming back into balance," said Kelvin Wickham, Fonterra's Managing Director of Global Trade.

This mortgage approval bounce is due solely to the pressure of increasing long term rates. People are trying to cash in on lower fixed rates, this will die down as long term rates go back to higher levels and deposit requirements remain higher than pre-credit crunch.

Perhaps we need a stock on mortgage approval levels?! I wager over the next few months things will drop back down.

There is no doubt that refinancing is part of the story but I'd be surprised if it was the full story (again remember the RBNZ data does not include refinancing where that occurs with your existing mortgage provider).

i'm referring to buying conditions too, i think there will be general feeling of "having missed the boat" as the long term rates rise.



Edited 1 time(s). Last edit at 04/02/2009 12:48PM by ltgorman.

If he cuts again, isnt he giving the banks a break....if things are slowly beginning to be positive, what would the reason be to cut lower?.

Well that's exactly it shatec, things are not exactly beginning to be positive. GDP is still expected to be negative, the economy is still not really picking up, and banks are only putting up long term rates because it is more expensive for them to borrow, in tern making it tougher for home owners to buy. The OCR still needs to be lowered a bit more to keep stimulating the economy for the next 6-12 months.

I think interest rates are low enough. This report out this morning confirms what the mortgage approvals data and anecdotes had been suggesting.

>>>>>>>>>>>>>>>
Auckland house sales soar 65pc in March

An Auckland real estate firm is reporting a 65 per cent surge in house sales during March, saying the market has "come out of hibernation".

Barfoot & Thompson, which releases monthly sales stats for Auckland, says home buyers have "returned to the Auckland market with a vengeance", - with March sales reaching a 20 month high.

[www.nzherald.co.nz]

If Barfoots are reporting a 5.8% price drop for the year it will be interesting to see QV results. Barfoots average prices are usually well above QV and 5.8% is huge.

I still think this is a rush to capitalize and lock in lower longterm interest rates being offered during March. I also suspect a lot of people are selling up as a way to finance their way out of the higher interest rates they locked in during the boom.

Man i hate these re-written press release articles from real estate firms.

"Man i hate these re-written press release articles from real estate firms".

Yea me too, and why would you ever believe an article from a real estate firm anyway, they all lie to push the market so they can get some sales lol...

[www.interest.co.nz]

Latest from interest.co.nz, RBNZ expected to make 50 point cut on 30th April.

What are others picking?

Im' still picking a 25 point cut.

Financial markets are pricing 27bps as of this morning i.e. a high degree of certainty around 25bps.

Mortgage approvals last week totalled the most in any week since the RBNZ starting collecting the data in 2003. Do we really need lower interest rates? Perhaps we just need a little patience.

[www.rbnz.govt.nz]

the increased volume makes sense:

[www.interest.co.nz]



Edited 1 time(s). Last edit at 04/08/2009 03:30PM by ltgorman.

Dibbo Wrote:
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> Financial markets are pricing 27bps as of this
> morning i.e. a high degree of certainty around
> 25bps.


Which "financial markets" are you referring to?
Sources? Links?

ANZ National ignores talk of OCR cut and lifts term deposit rates sharply:
[www.interest.co.nz]

90 Day New Zealand Bank Bill Futures and Options on ASX are standing on 3% OCR (no cut) next RBNZ meeting:
[www.asx.com.au]