Wake up APRA. From UBS’s recent loan officers survey:
Mortgage & Large Corporate underwriting standards loosened materially
Loan Officers indicated lending standards have been loosened materially in both mortgages and large corporate lending over the last six months. In housing, improved market prospects and competition were cited as the factors driving a loosening in standards. This has led to a material reduction in both price and fees in mortgage lending. Bank Loan Officers also indicated a loosening of underwriting standards for large corporates, especially in Residential Development. Competition was viewed as the main driver behind this loosening in standards, and has been reflected in price reductions and loan maturity. This was partly offset by tightening in underwriting standard to the Mining and Mining Services sectors, a trend which has now been in place for the past 12 months. Loan Officers’ indicated that they expect these trends in mortgages and large corporate lending to continue going forward.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
