Mac Bank mortgage retrenching on APRA?

From Banking Day:

Macquarie Group expects its runaway mortgage business to “normalise” over the next couple of years, as its growth rate moderates and it starts to produce a higher return on equity.

Speaking at an operational briefing yesterday, Macquarie’s group head of banking and financial services, Greg Ward, said the mortgage market was very competitive.

…Macquarie’s mortgage book grew by 41.5 per cent over the 12 months to December but in the month of December the growth rate dropped back to an annualised rate of around 20 per cent.

…Ward said Macquarie was too small to be of major concern to the regulator. “I don’t think we are the target of APRA’s announcement,” he said.

Bollocks. The Mac Bank mortgage free radical is pushing hard into the margins of investor mortgage finance. Last year it grew at 107% off a smallish base. Pull it back and the entire system will slacken a little.

APRA jawboning is already at work here but much more is needed to pull Mac Bank behind the 10% growth line.

Comments

  1. It is amazing to me that these masters of the universe in investment and retail banking are not aware of the loud siren blaring from the bond market of the state of the world economy.
    I was taught in bonds that ten year nominal yields are an expectation of future growth.

    In the major economies this is near zero. Australia is on its way to a ten year bond yield with a 1 in front,
    Yet these mad people are lending like there is no tomorrow or perhaps they know there is no tomorrow.

    It was madness on the way up and it will be madness on the way down.

  2. I know their culture. They won’t pull back voluntarily as a result of jawboning. Whilst it is technically allowed by the black letter of the regulations, they will lend as much as they can.

    They will need to be forced to stand down at the proverbial gunpoint.

    • This is the default setting for all such institutions spanning the entire globe. Its why we always get the bubble, followed by the calamitous crash.

  3. I reckon Macbank is in fact the main target of the RBA’s concerns.

    Their lending policies and underwriting processes are more lenient than the majors and they source the vast majority of their loans from third parties – demonstrably higher risk.

    They are also patently less likely to survive a downturn. These are the guys that came closest to failing post-GFC to the extent that they pulled out of home lending almost entirely for several years.

    In any event, even though their lending volumes are relatively small, their behaviour will eventually drive other lenders up the risk curve in order to compete and maintain market share.

    These guys are the bottom of the barrel in so many ways and this just proves it.

  4. “I don’t think we are the target of APRA’s announcement”

    I love the Macquarie Jedi mind tricks. Worked well for that rubbish short sale ban back in the GFC…