Tony Alexander

Economic Commentaries

Weekly Overview 10 November 2016

Thursday November 10th 2016

This week we do what everyone else on the planet is doing and make some comments about the win for Donald Trump in the US Presidential election. Our conclusion is that the economic impact on ourselves will be minimal and it is notable that initial selloffs in financial markets have been more than reversed.

We then take a look at how in many countries banks and regulatory authorities are tightening up on lending into the property sector. The extra overlay for NZ is bank home lending rising but retail deposit growth slumping. With a pressing need to fund a higher percentage of the lending to Kiwis from Kiwis this means lending growth is being constrained by a shortage of Kiwi savings.

Next we delve into housing and the issue of concerns about homelessness being correlated with the pace of house price rises. Enjoy. Oh, and the Reserve Bank met expectations by cutting the official cash rate this morning to 1.75% from 2.0% and indicating no further cut is likely. We agree. Fixed home loan rates are drifting up and were I borrowing at the moment I’d fix most of my debt for three years.