Today I argue that the Hayne royal commission’s interim report is flawed in several respects that will force lenders to hike mortgage rates and reduce access to credit (click on that link to read the column):
This is already happening: our latest estimates of default rates on home loan portfolios are trending higher as lenders lift rates “out of cycle”. Concurrently, we’re seeing a sharp decline in borrower pre-payments as costs ratchet up. Combined with falling house prices and rising loan-to-property value ratios, the risks associated with investing in residential mortgage-backed securities (RMBS) are climbing fast.
The full text of this article is available to MacroBusiness subscribers
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.
