The OCR didn’t budge on 9 July, but it gave everyone another excuse to talk (again) about interest rates and inflation. So, let’s.
I’m still seeing a lot of weakness in the economy so my vote was to keep cutting. However, my vote holds zero sway (which is probably for the best). We might be heading into a period of sticky inflation, and with it, higher interest rates. Not the fun kind of inflation either — more like council rates, insurance premiums, and butter for my vogels.
Wholesale interest rates have been sitting relatively stable for the past three months. That might suggest we’re bumping along the bottom of the interest rate cycle. If you’re an investor, that means term deposit interest rates probably won’t drop much further. But with inflation nibbling away at returns, parking money for long periods still needs a bit of consideration.
For the economic enthusiasts among us, here’s a fun fact: the past 30 years of NZ’s economic growth has been largely fuelled by rising private debt — home owners and property investors borrowing to buy houses, businesses taking out loans, and the agri sector taking on debt. While we’ve started to see the homeowner and property investor segment pick up a bit in recent months, businesses have collectively paid down debt and agri’s firmly in repayment mode. The reduction in business debt during April/May was significant. That’s a recipe for anaemic economic growth and a lower tax take. In short, don’t hold your breath for a stellar GDP result for the June quarter.
OK, economic rant over. Let’s get into the bits that matter most to you.
Loan portfolio: healthy as ever
We’re in solid shape. At the time of writing this, there are:
- Just three personal loans in arrears - probably an all-time low
- Three home loans on our radar - two should resolve this month. The other is not raising any red flags and should resolve in August or September.
- 18 construction loans over term - slightly down on June and more on track to resolve soon
- Reserve funds continue to grow and are well-positioned to support each portfolio.
Investment wait times
Here's how things are looking:
- Personal loans: The queue is loooooong. Some folks have been waiting nearly 12 months. We know that’s not ideal. The reality is, we keep our personal loan standards high (deliberately), and that means fewer loans to go around. If you’ve camped in this queue recently, you might want to think about moving funds to another investment option.
- Home loans and construction loans: Wait times are about a week and holding steady. We’ve ramped up loan volumes to match growing investor demand.
Managed fund investments
We’ve had word that a few of you have been contacting our fund administrator, Adminis, with questions. They’re great at what they do, but they’re not set up for direct support. Best to send any questions our way — Lydia, Lucas, Richard, or I will happily help.
Feature requests and roadmap
We’re in You’ve asked for these features and here’s where they’re at:
- Multiple on-call accounts and investment buckets: Work is underway! It’s a big build, but we’re aiming to have it ready early next year.
- Kids accounts and joint accounts: Next on the list, once the above is done and dusted.