MacroBusiness covers Australian banks from the perspective of their macro-economic role, as political economy actors, as investment propositions and in terms of financial stability and capital adequacy. Australian banks have played a crucial role in inflating the Australian property bubble, exist within an utterly privileged position as “too big to fail” institutions and operate within a deeply distorted financial architecture that has Australian tax payers well and truly on the hook in the event of trouble. MacroBusiness seeks to define this role for investors as well as change it in the name of the Australian national interest.
[REPORT] Demand for cash soars: The value of banknotes on issue rose by $2 billion (2.3 per cent) in June to $90 billion. Issuance of $50 notes is growing at the fastest pace in 11 years https://t.co/KScFO5vfwY #ausbiz #ausecon pic.twitter.com/yftlO7Hgc4 — CommSec (@CommSec) July 1, 2020 The savings rate is going to climb a lot,
Via Moody’s Summary » The 30+ days delinquency rate for prime Australian residential mortgage-backed securities (RMBS) increased to 1.79% in March 2020 from 1.55% in December 2019 and 1.57% in March 2019. » Delinquencies will continue to increase in 2020 because of the economic disruptions caused by the coronavirus outbreak. Delinquencies will continue increasing over
As Leith noted yesterday, Australia is well into a specufestor mortgage credit rout: If we dig into APRA’s monthly banking stats for May today we can see who’s behind it. Basically the majors are all pulling their heads in, though ANZ flopped into the positive for one month at least: But one big eight bank
With Australia’s official cash rate crashing to just 0.25%, mortgage rates have also cratered to all-time lows: Some smaller lenders have even lowered mortgage rates below 2% for the first time ever as competition intensifies: Mortgage loan interest rates have plunged below the two per cent mark for the first time ever in Australia. Experts
The Reserve Bank of Australia (RBA) has released its private sector credit aggregates data for the month of May 2020: A chart plotting the long-run time series is shown below: Overall mortgage growth was 3.1% in the year to May, a fraction above all time lows (3.0%). A breakdown of owner-occupied credit (0.5% MoM; 1.5%
Australia’s banks have pledged to continue to defer mortgage repayments for customers struggling financially during the COVID-19 crisis. Prime Minister Scott Morrison and Treasurer Josh Frydenberg met with bank CEOs and the RBA Governor on Friday and confirmed that additional support will be provided to those that need it. According to the Australian Bankers
Via Westpac: Westpac Banking Corp has won a significant victory in the Federal Court, where two judges to one have found in favour of the bank on its interpretation of responsible lending duties, dealing another blow to the corporate regulator in the prolonged dispute. The Australian Securities and Investments Commission had appealed the original ‘shiraz
In September 2019, the Australian Securities & Investments Commission (ASIC) reported that one in 10 consumers who took out a home loan via a mortgage broker were finding it hard to meet their repayments within 12 months. ASIC’s research also found that although consumers generally expect a mortgage broker to secure the most suitable home
So predictable: Quarterly Statement by the Council of Financial Regulators – June 2020 The Council of Financial Regulators (the Council) held its regular quarterly meeting on Friday, 19 June. The Australian Treasurer attended for part of the meeting. The Council has been meeting more frequently over the past several months and will continue to do so
In noted yesterday how Australia was facing a mortgage time bomb given 485,063 mortgages valued at $175.6 billion have been deferred for six month by Australia’s banks, representing around one in fourteen borrowers: I also noted how the expiry of these mortgage deferrals would coincide with the expiry of the Morrison Government’s emergency income support
The Australian Bankers Association (ABA) has updated its loan deferral data to 19 June, which reveals that 779,458 loans have been deferred across Australia, including 485,063 mortgages: In value terms, $236.7 billion of total loans have been deferred, including $175.6 billion of mortgages: According to the ABA, one in fourteen mortgages are currently being deferred
I noted earlier this week how Australia was facing a mortgage repayment cliff in September given 480,700 mortgages have been deferred for six months by Australia’s banks worth $173.5 billion: That equates to around one in 14 mortgage holders, according to the Australian Bankers Association. Now, it’s been revealed that the banks will extend relief
Lordy, COVID-19 is exposing the Kouk as an economist of such throwaway views that he might well claim the earth is flat shortly: Where do you think the $7.0b “to private bank accounts” comes from? It is from the savings in – wait for it – private bank accounts (household savings /super funds / insurance
The Australian Banking Association (ABA) has released data on loan deferrals to 12 June. 772,600 loans have been deferred across Australia, including 480,700 mortgages: In dollar terms, $234.1 billion total loans have been deferred, including $173.5 billion of mortgages: According to the ABA, around one in 14 mortgage holders have had their repayments deferred. The
Via the excellent Damien Boey at Credit Suisse: Loan demand plunges in April. Loan approvals fell sharply by 9.2% in April, taking year-ended growth lower to -2.9% from 12.6%. Compositionally, weakness was broadly based across lending categories, with particularly sharp falls in personal and business construction loans. Worse still, the Australian Bureau of Statistics (ABS)
So says Bloomie: The global shift to value from growth is playing out in Australian shares in force and could help the nation’s benchmark stock index close the gap with regional peers, according to analysts. The recent surge in domestic value stocks is stronger than in the U.S. in part because the major banks have
A strangely put but sensible warning from the Flying Circus today: Investors holding the banks as a safe yield play have had a wake-up call courtesy of COVID-19. NAB has cut its dividend by more than 60 per cent, ANZ and Westpac have deferred their interim dividends and decide in August whether to make a
Via Banking Day: A showdown looms this morning between ME Bank’s board and irate shareholders seeking accountability for the ruinous decision to slash redraw entitlements of thousands of its mortgage borrowers. ME’s board is due to meet for the first time since the bank’s reputation was savaged in the first week of May by customers
Data from Canstar shows that Australian banks reduced the interest rates on a range of savings accounts and term deposits by up to 75 basis points in May, sending them to near zero: Retirees and savers are wearing the costs of a home loan price war… Canstar financial services executive Steve Mickenbecker attributed the race
Via Moody’s: » The 30+ days delinquency rate for prime Australian residential mortgage-backed securities (RMBS) increased to 1.79% in March 2020 from 1.55% in December 2019 and 1.57% in March 2019. » Delinquencies will continue to increase in 2020 because of the economic disruptions caused by the coronavirus outbreak. Australian prime RMBS delinquency rates, which
Via APRA monthly banking numbers for April. Investor mortgages are still in retreat following last year’s major accident: The year on year shrinkage will not make seen again until June when we get twelve months from APRA’s portfolio rejig. But investor mortgages are falling across the big eight banks, and accelerated downwards in April: NAB
Via the excellent Damien Boey at Credit Suisse: Credit growth surprises materially to the downside. Bank credit was unchanged in April, compared with the Consensus forecast for 0.6% monthly growth. Year-ended growth slowed to 3.6% from an upwardly revised 3.7%, versus expectations for a pick up to 4% . Compositionally, business and housing credit rose moderately, while personal credit fell. Arguably the
A Senate committee has been told that businesses and households have now deferred around $250 billion worth of loan repayments due to the coronavirus pandemic. However, Australian Prudential Regulation Authority (APRA) chairman Wayne Byres conceded that some customers will not be able to repay their loans when they are required to resume repayments: Australian Prudential
The Australian dollar is pulling back a little from the overnight surge: Bonds are firm: XJO is holding: Underneath the bonnet, however, there is considerable action. Big Iron is copping it: Big Gas marches on: Big Gold is bashed: But Big Banks have launched as Australia’s virus victory percolates: The financials index has very a
Via Banking Day: Demand for guarantees under the Morrison Government’s First Home Loan Deposit Scheme now exceeds capacity after the limit of 10,000 borrower reservations was reached last week. Data collated by the National Housing Finance and Investment Corporation – the government agency tasked with managing the program – show that 5,500 guarantees have been
What’s our medium to long-term outlook on Australian banks? We are not positive on Australian banks in the medium term. Australian banks will have a time to shine again. That time is not while staring down the barrel of the highest unemployment rate seen since the Great Depression and an extended period of close to
Can anyone say “sovereign risk”: S&P Global Ratings today said it has revised its outlook on Genworth Financial Mortgage Insurance Pty Ltd. (Genworth Australia) and Genworth Financial Mortgage Insurance Pty Ltd. (NZ Branch) to negative from stable. At the same time, we affirmed our ‘A’ insurer financial strength and issuer credit ratings on both entities. We also affirmed the rating on Genworth Australia’s subordinated
The Australian Bankers Association (ABA) has released figures showing that 429,000 mortgages have so far been deferred – one in every 14 mortgages – totaling $153.5 billion: The Australian Banking Association today released new figures which showed 429,000 mortgages had been deferred totalling $153.5 billion. The figures take the total number of loans deferred to
Some numbers for you: 1. Gov’t Guarantee 50% of new loans, up to $40b. Runs from 23 March to 30 Sep; 3. CBA has lent $555m and NAB $370m about a quarter of the way through, and 4. If you assume WBC and ANZ are a little lower than NAB = $1.5b ish so far.
Via the excellent Damien Boey at Credit Suisse: Real yield curve model points to steepening, but … We define the Australian real yield curve as the 10-year inflation-indexed bond yield minus the real 3-month interbank rate, using the inflation swaps curve to profile long- and short-term inflation expectations. Our proprietary model of the real yield curve
