Mad Macquarie makes a mockery of APRA

Its plunge into investor mortgages is a source of much amusement:

In it went the moment APRA lift the 10% speed limit (actually a bit before that). There was a big lift in May from either portfolio rebalancing or an acquisition but even accounting for that the book is currently growing at 25% per annum.

It can hardly be doing so without trashing lending standards. Indeed, it is very obviously soaking up market share from those rejected by major banks so it is doing so intrinsically.

MQG is a systemically important bank – as the GFC bailout showed – and APRA should not be allowing this kind of cavalier credit issuance. Indeed, this rampant credit binge is happening just as APRA  talks up its tough new approach up in the final days of Hayne.

Time to plug the hole in the silver donut, APRA.

David Llewellyn-Smith
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    • I was in the room with some financial advice people recently, and used the words ‘bunch of thieves’ when MCQ were mentioned, and all the advisors nodded as one.
      Quite funny at the time.

  1. The more likely explanation is that they had previously had tight credit requirements and therefore were blown out of the water by the other banks. Now that that the other banks have made their requirements more strict, the Macquarie offering is relatively more attractive to investors. So the growth in the book is really about catching up.

  2. I don’t expect any of the toxic sludge to remain on their book though. In fact, the government will buy up the toxic mortgage security when things go pear shape, just like after the GFC. So it is indeed ‘free money’ for MacBank.

    • This. MQG are not stupid, they just have stupid clients. They’ll be securitising them as fast as the paper can roll off the printer, and offloading them to their clients. And in true investment bank style, probably taking out default swaps on them as well. Now that house prices are actually falling, they probably realise that the window is closing, so are making hay while the sun shines.

  3. It’s the Goldman’s model, be that close to Gov you will always be safe, hence take as much risk as you can and fund a few mates in the process

  4. MacBank is the SIV rorter investment provider of choice. “Invest” $5m with Macbank, obtain visa, and Macbank will lend you up to $5m to purchase a property. From that perspective, many of MacBank’s property investors have put up 100% collateral.

    • I look at this and wonder how much it reflects Chinese ‘laundromat’ business. HSBC is the other bank exempted from the 10% investor growth limit and HSBC’s main business is in facilitating Chinese capital flight.

  5. Jumping jack flash

    Look at it go!
    Go you good thing.

    Obviously there’s no risk. What is risk anyway? IR at historic lows, and the RBA gave its blessing to keep them there, so they clearly don’t see any risk.

    Besides, house prices always go up. And even if they don’t, they’re worth at least what we said they were worth when the debt was attached. 2 million, 5 million, it doesn’t matter, just pick a number and the bank will do the rest. This is Australia and we have kangaroos, dammit!

  6. When GFC2 arrives and MQG needs another “people-bailout” just send the above chart to every media outlet in Australia and around the globe! Demand the Government not rescue this “out-of-touch” freak show of a bank.

  7. And the spinners have been hard at work for “Saint” Nick in AFR today.

    Which bank had to arrange to ban short-sellers of their shares at GFC and then went full retard on gov support funds to punt overseas. They will never change their spots.

  8. If we look from the other angle – this limit was removed for a reason. Allowing Macquarie to go beyond the 10% was clearly it.
    Does anyone know why APRA might have wanted/allowed this to occur for Macquarie?