From Mac Bank:
Event
Our mystery shopping highlighted that banks have tightened their lending standards over the last 12 months. We believe these changes combined with further risk of tightening (i.e., interest-only loans to owner-occupiers) will likely result in ongoing pressure on the outlook for banks’ volume growth. Moreover, in a more constrained growth environment, banks appear to be aggressively competing for higher quality lending, putting pressure on returns. Our analysis highlighted that based on the prevailing level of discounting the front book mortgage returns are ~14%, well below the back-book of ~30%.
