1
00:00:00,080 --> 00:00:02,800
Speaker 1: More from the New Zealand Economic Recovery story. Stats this

2
00:00:02,840 --> 00:00:06,240
Speaker 1: morning the show sixty eight percent of fixed rates are

3
00:00:06,320 --> 00:00:08,160
Speaker 1: up for renew all this year. Now, that's one hundred

4
00:00:08,160 --> 00:00:10,879
Speaker 1: and thirty two billion dollars worth of decisions to be made.

5
00:00:11,119 --> 00:00:13,520
Speaker 1: Kelly Ekold as Westpax chief economist and ease back. Well,

6
00:00:13,520 --> 00:00:14,480
Speaker 1: there's Kelly morning to you.

7
00:00:15,200 --> 00:00:15,720
Speaker 2: Good morning.

8
00:00:16,160 --> 00:00:19,799
Speaker 1: When if we accept that the bottom is gone and

9
00:00:20,000 --> 00:00:22,320
Speaker 1: interest rates are going to start to trend up, when

10
00:00:22,360 --> 00:00:25,960
Speaker 1: are all these refixes actually potentially coming off something and

11
00:00:26,040 --> 00:00:27,880
Speaker 1: not necessarily going on to something lower.

12
00:00:29,160 --> 00:00:31,120
Speaker 2: Well, it's still a weird way. Yet, there's quite a

13
00:00:31,160 --> 00:00:35,720
Speaker 2: long tail of this process. If you remember, all through

14
00:00:35,760 --> 00:00:39,279
Speaker 2: the last year or so, customers were tending to refix

15
00:00:39,360 --> 00:00:43,920
Speaker 2: pretty regularly, but they were still picking terms of around

16
00:00:43,960 --> 00:00:46,680
Speaker 2: maybe one year or eighteen months because that's where the

17
00:00:46,680 --> 00:00:49,680
Speaker 2: lowest interest rationally was on the curve right, and it

18
00:00:49,800 --> 00:00:52,879
Speaker 2: was also the point where people want a maximum flexibility

19
00:00:52,960 --> 00:00:56,200
Speaker 2: in case the RB and Z cut THEOCR by even more.

20
00:00:56,520 --> 00:00:59,240
Speaker 1: Are we all settled now on the understanding there are

21
00:00:59,240 --> 00:01:01,800
Speaker 1: no more cuts, there are possibly increases this year or

22
00:01:01,880 --> 00:01:04,039
Speaker 1: is there still some question marks out there? Do you think?

23
00:01:04,800 --> 00:01:07,319
Speaker 2: Well, I think will always be some question marks, but

24
00:01:07,480 --> 00:01:10,600
Speaker 2: the market seems pretty clear that we're getting two hikes

25
00:01:10,640 --> 00:01:16,200
Speaker 2: this year. Most of my colleagues in the market seem

26
00:01:16,280 --> 00:01:18,959
Speaker 2: to think we're getting at least one. I think the

27
00:01:19,040 --> 00:01:21,000
Speaker 2: proof in the pudding is going to be just how

28
00:01:21,080 --> 00:01:25,479
Speaker 2: residient the improvement and growth that we've seen continues as

29
00:01:25,520 --> 00:01:27,920
Speaker 2: we go through the winter months, because we have seen

30
00:01:28,000 --> 00:01:30,760
Speaker 2: that tendancy of growth sag a bit in the middle

31
00:01:30,760 --> 00:01:31,160
Speaker 2: of the year.

32
00:01:31,319 --> 00:01:33,720
Speaker 1: Yeah, has that tune changed you talk twelve and eighteen.

33
00:01:34,400 --> 00:01:36,080
Speaker 1: Is the tune any different from the way it has

34
00:01:36,080 --> 00:01:37,920
Speaker 1: always been, as a few people on six months just

35
00:01:38,000 --> 00:01:38,560
Speaker 1: hoping or not.

36
00:01:39,800 --> 00:01:41,880
Speaker 2: No, there's still a few people on six months, but

37
00:01:42,040 --> 00:01:45,000
Speaker 2: most of the customers we see are doing anything between

38
00:01:45,040 --> 00:01:47,639
Speaker 2: one and two years because those interest rates are actually

39
00:01:47,680 --> 00:01:51,360
Speaker 2: pretty close together and they're the lowest points in the curve.

40
00:01:51,720 --> 00:01:54,400
Speaker 2: There's much less enthusiasm for sort of three, four and

41
00:01:54,480 --> 00:01:57,400
Speaker 2: five year mortgages because they've all gone back over five percent.

42
00:01:57,640 --> 00:01:59,920
Speaker 1: Exactly what do you reckon the role of the reefing

43
00:02:00,480 --> 00:02:02,040
Speaker 1: on spending and on mood.

44
00:02:03,880 --> 00:02:06,320
Speaker 2: I think it does have a role, but we have

45
00:02:06,400 --> 00:02:09,760
Speaker 2: to remember it's just part of the transmission mechanism. I

46
00:02:09,800 --> 00:02:13,359
Speaker 2: think December was pretty interesting because we had a record

47
00:02:13,400 --> 00:02:15,880
Speaker 2: amount of refixing. It looks like about five and a

48
00:02:15,919 --> 00:02:19,040
Speaker 2: half billion or so. Well, we just chickened over. That

49
00:02:19,240 --> 00:02:21,280
Speaker 2: was a month where I think a lot of new

50
00:02:21,360 --> 00:02:25,920
Speaker 2: cilders did move on to those lower interest rates. But importantly,

51
00:02:26,040 --> 00:02:28,880
Speaker 2: the competition between the banks was quite large, so there

52
00:02:28,919 --> 00:02:31,440
Speaker 2: was quite a lot of money paid out for inducements

53
00:02:32,120 --> 00:02:35,880
Speaker 2: for these test deals. I reckon that might have contributed

54
00:02:35,960 --> 00:02:38,280
Speaker 2: to what was cheping up to be a pretty good

55
00:02:38,400 --> 00:02:40,000
Speaker 2: January for consumer confidence.

56
00:02:40,120 --> 00:02:42,400
Speaker 1: An z's gone from five to two percent for the

57
00:02:42,480 --> 00:02:44,560
Speaker 1: year on increases and prices on houses.

58
00:02:44,800 --> 00:02:47,960
Speaker 2: Where are you at, Well, we're still around five percent

59
00:02:48,000 --> 00:02:51,480
Speaker 2: at the moment. We'll have our new forecasts coming out

60
00:02:51,560 --> 00:02:53,880
Speaker 2: in a couple of weeks. I mean, it still remains

61
00:02:53,919 --> 00:02:55,920
Speaker 2: the case that there's lots of stock on the market,

62
00:02:56,040 --> 00:02:59,120
Speaker 2: so even though demand is about average now given the

63
00:02:59,160 --> 00:03:01,800
Speaker 2: lower interest it's going to take a while to chew

64
00:03:01,840 --> 00:03:03,200
Speaker 2: through all of that extra stock.

65
00:03:03,800 --> 00:03:05,480
Speaker 1: And what's you feel on jobs tomorrow?

66
00:03:06,960 --> 00:03:09,000
Speaker 2: Well, jobs, I think we're going to see some jobs

67
00:03:09,040 --> 00:03:11,120
Speaker 2: growth for the first time in a while. You know,

68
00:03:11,160 --> 00:03:13,840
Speaker 2: we've got employment growth of around about zero point three

69
00:03:13,880 --> 00:03:17,320
Speaker 2: percent for the quarter, which is about population growth so

70
00:03:17,360 --> 00:03:19,760
Speaker 2: that's why we don't think the unemployment rate's going to rise.

71
00:03:20,120 --> 00:03:22,639
Speaker 2: I think some of the forward indicators the jobs market

72
00:03:22,600 --> 00:03:26,320
Speaker 2: it's pretty encouraging, particularly since we do look like we're

73
00:03:26,320 --> 00:03:31,520
Speaker 2: seeing recently decent quarterly GDP growth now, and we're GEDDP

74
00:03:31,720 --> 00:03:34,560
Speaker 2: goes jobs do because you need people to produce the

75
00:03:34,600 --> 00:03:35,320
Speaker 2: output you do.

76
00:03:35,360 --> 00:03:37,440
Speaker 1: Indeed, Kelly, good to end on a good note. Kelly,

77
00:03:37,440 --> 00:03:39,680
Speaker 1: you call that numbers out tomorrow. By the way, Westpac

78
00:03:39,720 --> 00:03:42,360
Speaker 1: chief economists with us this morning. For more from the

79
00:03:42,440 --> 00:03:45,480
Speaker 1: Mic Asking Breakfast, listen live to news talks. They'd be

80
00:03:45,600 --> 00:03:49,440
Speaker 1: from six am weekdays, or follow the podcast on iHeartRadio