Australia’s banking sector continues on its mad rush to squeeze the last drop of juice from the mortgage lemon, with Australia’s only home grown investment bank – Macquarie – pursuing mortgages with vigor and seemingly moving away from its role as the broker of high risk, high return business investment. From The AFR:
Macquarie Group continues to outstrip its bank rivals with gross loans and advances up 4.9 per cent in May, equating to 58.7 per cent annualised loan growth.
The bank also posted a 60 per cent annualised jump in its loan book driven by strong growth in its mortgage division…
Macquarie chief Nicholas Moore said in May the company wanted to see its mortgage book return to pre-global financial crisis levels of about $25 billion, up from $17 billion currently.
Last month, UBS banking analyst, Jonathan Mott, released research showing “that of the total increase in credit since mid-2012, $60.6 billion had financed owner-occupied housing, $45.8 billion residential investment properties, and $10 billion had gone into commercial property”. By contrast, “non-property business lending rose by just $3.2 billion, accounting for only 2.6 per cent of total credit growth over the period”.
All of which suggests that the Australian banking system is fast becoming one giant building society, whereby business lending is shunned in favour of less productive housing investment.
And with it comes negative productivity consequences for the Australian economy, which has lost competitiveness and needs to reinvent itself as the once-in-a-century commodity price and mining investment booms unwind.
