What Happened Thursday: Key News & Updates You Missed

New Zealand’s financial markets and economy experienced a range of shifts Thursday, May 8, 2025, with notable movements in mortgage rates, term deposits, Crown accounts, and currency valuations. Here’s a detailed look at the key developments:

Mortgage Rates Shift Toward Longer Fixed Terms Homeowners in New Zealand are increasingly opting for longer fixed-term mortgages, according to the latest Reserve Bank of New Zealand (RBNZ) figures for March. The data shows a significant rise in one- and two-year fixed mortgage terms, while floating-rate mortgages have fallen out of favor. First Credit Union led the way by cutting their one- and two-year fixed rates, reflecting a broader trend toward longer-term security in the housing market.

Term Deposit Rates Adjust as Savers Respond Rabobank adjusted several of its term deposit rates, with updates available for deposits of less than one year and those ranging from one to five years. These changes come as savers weigh the balance between yield and liquidity, especially in a period of economic uncertainty.

Residential Build Costs Ease, Signaling Affordability Gains The average estimated build costs for new homes have been gradually declining, a positive sign for affordability in the residential sector. Particularly encouraging is the sharp fall in the estimated build costs of retirement village units, which may indicate a shift toward more accessible housing options for retirees.

ANZ Profit Jumps, But Underlying Growth Remains Modest ANZ New Zealand reported a 23% increase in half-year profit, driven largely by hedging gains. However, when these gains are excluded, the underlying profit growth was just 0.5%, totaling $1.161 billion. CEO Antonia Watson highlighted both opportunities and challenges ahead, noting that nearly 40% of home loan borrowers are currently ahead on their repayments by at least six months.

Crown Accounts Show Significant Deterioration The nine-month Crown accounts to March 2025 reveal a substantial deterioration in the government’s financial position. The Operating Balance deficit widened to $4.484 billion, compared to a surplus of $1.740 billion in the same period the previous year. At the Operating Balance before Gains and Losses (OBEGAL) level, the deficit increased to $8.370 billion, up from $5.039 billion in 2024. For the month of March alone, the OBEGAL deficit was $1.790 billion, significantly larger than the $828 million deficit recorded in March 2024.

Online Retail Shows Signs of Recovery NZ Post’s online retail commerce update for the first quarter of 2025 indicates a rebound in the sector. Online spending on physical goods reached $1.5 billion, a 7% increase from the same period last year. Consumers spent more frequently and in larger amounts, suggesting a return to growth in digital retail.

NZX Sees Mixed Performance, Bond Demand Strong The NZX50 index was up 0.5% by 3 p.m., marking a 3.4% gain over the past week but a 3.9% decline since the start of the year. The index remains 6.6% higher than at the same time last year. The market saw 42 gainers, led by Gentrack, Synlait, The Warehouse, and Chorus, while 33 stocks declined, with Ryman, Restaurant Brands, Infratil, and Summerset among the losers.

Demand for New Zealand Government Bonds (NZGBs) was robust, with 119 bids for $450 million in bonds across three maturities. Total bids amounted to nearly $1.7 billion, though only 37 bids were successful. Yields varied slightly, with lower yields for the April 2029 and May 2036 maturities, but higher yields for the rare May 2051 maturity.

Currency and Swap Rates: NZD Dips, Swaps Stable The New Zealand dollar (NZD) experienced a slight decline, while wholesale swap rates remained largely unchanged across all durations. The 90-day bank bill rate was down one basis point to 3.39%.

International Credit Standards Tighten In Australia, recent changes to the National Credit Code have clarified that buy-now-pay-later (BNPL) contracts are covered under the legislation. The Australian Securities and Investments Commission (ASIC) has issued regulatory guidance for the BNPL sector, aiming to impose stricter credit standards and enhance consumer protections.

These developments reflect a dynamic economic landscape in New Zealand, with implications for borrowers, savers, investors, and policymakers alike. As the market continues to evolve, stakeholders will be closely watching for further shifts in interest rates, government finances, and consumer spending trends.