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.
Lender Firstmac believes that debt-to-income mortgage curbs are on APRA’s agenda: Brisbane-based Firstmac… argued the regulator seemed poised to introduce some new steps. “We’re probably not far away from a second round of macro [intervention], which will most likely be debt-to-income ratios,” [chief financial officer James Austin] said… [Firstmac said] such a ratio would potentially limit
As regular readers know, I consider the growth in new mortgage commitments to be the key indicator or property prices. The latest ABS housing finance data for September showed that mortgage growth has slowed sharply. And since nearly every home in Australia is purchased with a mortgage, this falling mortgage growth historically points to slower
The Bank for International Settlements (BIS) has released its global household debt statistics for the June quarter of 2021. This data shows that Australia still has the second highest stock of household debt in the world when measured against the size of its economy, as measured by Gross Domestic Product (GDP). As shown in the
The Reserve Bank of Australia (RBA) has released its private sector credit aggregates data for the month of October. Quarterly mortgage credit growth decelerated further to 1.8% after recently recording the highest rate of growth since 2015: Owner-occupiers continue to drive mortgage growth, rising by 2.3% over the quarter versus 0.8% growth for investors: Meanwhile,
The Australian Prudential Regulatory Authority (APRA) yesterday afternoon released its new “more risk-sensitive” bank capital framework, which incentivises banks to lend to lower-risk owner occupiers rather than higher risk investors: The framework, developed over four years of consultation, will help to ensure Australian banks continue to have the financial strength to withstand future adverse economic
The Australian dollar is sitting right on vital support as markets digest Omicron. So far it has held but a break of support here opens big downside potential: The ASX200 has gapped 1.2% at the open but is being aided by firm American futures: Yields are rising as risk diminishes. Markets have this completely backwards.
It’s been the bubble that just won’t die. The CBA, ponderous utility with a dying business model, was misrepresented as some kind of new-age unicorn. This silliness handed it the most expensive multiple in world banking, and 50% above a peer group from which it is indistinguishable: The problem is, with such a growth multiple,
Research undertaken on behalf of the Finance Brokers Association of Australia shows that an official interest rate rise of just 1% would be enough to push many homeowners into mortgage stress. The survey found that 57% of respondents would not be able to meet a $300 increase in their rent or monthly mortgage repayment. FBAA
Coolabah Capital with the note: Folks are starting to turn their minds to what life looks like after the end of the RBA’s bond purchase program (aka quantitative easing or QE). There’s a fairly robust consensus that Martin Place will look to accelerate its QE3 taper from $4 billion/week currently down to $2 billion/week in
The Australian Prudential Regulatory Authority (APRA) has advised banks that it may implement tougher macro-prudential mortgage curbs if they don’t take action to rein-in higher risk lending. APRA last month applied the brakes to higher-risk mortgage lending by requiring banks to use more cautious interest rate assumptions when assessing new customers. Yesterday, APRA issued a
As noted over the past week, the RBA’s bond market back-up is going to kill sub-2% fixed-rate mortgages in short order. To wit: Westpac has hiked its fixed mortgage rates for a second time in three weeks, becoming the first major bank to increase home loan rates in response to Tuesday’s decision by the Reserve
The Reserve Bank of Australia (RBA) has released its private sector credit aggregates data for the month of September. Quarterly mortgage credit growth fell marginally to 1.9% after recently recording the highest rate of growth since 2015: Owner-occupiers continue to drive mortgage growth, rising by 2.4% over the quarter versus 0.8% growth for investors: Meanwhile,
The latest quarterly data from the Reserve Bank of Australia (RBA) and the Bank for International Settlements (BIS) showed that household and mortgage debt repayments as a ratio of incomes fell to their lowest level in decades, brought about by the collapse in mortgage rates: The below graphics from CoreLogic, which are current to August
Via APRA just now: The Australian Prudential Regulation Authority (APRA) has today increased the minimum interest rate buffer it expects banks to use when assessing the serviceability of home loan applications. In a letter to authorised deposit-taking institutions (ADIs), APRA has told lenders it expects they will assess new borrowers’ ability to meet their loan
Without putting too fine a point on it, macroprudential tightening has been bad for Aussie banks in the past. The last time a campaign was launched, Aussie banks fell for five years and diverged enormously from US banks: There were other factors. The Hayne Royal Commission and COVID-19 but I’m sure you get the point.
The Australian mortgage market fell in August amid lockdowns, according to new data released today by the Australian Bureau of Statistics (ABS). The total value of new mortgage commitments fell by a seasonally adjusted 4.3% in August 2021 to be up 47.4% year-on-year: As shown above, owner-occupiers have driven mortgage demand this cycle, whereas investor
BankingDay with the note: The two-months’ worth of much anticipated industry data on loan deferrals produced by APRA late yesterday can only add to the belief there will be an early shift to macroprudential controls on bank lending in the mortgage market. The top-line numbers seem ho-hum at first glance. Total loan deferrals of A$11.9
The Reserve Bank of Australia (RBA) has released its private sector credit aggregates data for the month of August. Quarterly mortgage credit growth was flat at 1.9% after rising for 12 consecutive months – the highest rate of growth since 2015: Owner-occupiers continue to drive mortgage growth, rising by 2.6% over the quarter versus 0.7%
The Council of Financial Regulators (CFR), which is the coordinating body for Australia’s main financial regulatory agencies and comprises APRA, ASIC, RBA and Treasury, has released its Quarterly Statement, which confirms that macroprudential mortgage curbs are on their way [my emphasis]: The Council continued its dialogue on housing credit conditions and associated risks. Housing credit
Courtesy of the always excellent BankingDay: Oceans of liquidity in the banking system are transforming the operational and financial markets sides – but not the policy sides – surrounding the conduct of monetary policy in Australia. At least until the next crisis. Late last week, the RBA informed banks and other participants in the Reserve
After successive warnings from the CBA and the IMF, Treasurer Josh Frydenberg has green-lit regulators to implement macroprudential mortgage curbs to cool the property market: Mr Frydenberg spoke about the issue to the Council of Financial Regulators at its quarterly meeting last Friday… “A positive feature of this housing cycle compared to that of the
The CEO of the nation’s biggest bank, CBA’s Matt Comyn, gave evidence yesterday to the House of Representatives Economics Standing Committee warning that Australia’s house price boom is unsustainable and calling for ‘modest’ moves to cool the market. The CBA has also lifted its benchmark floor rate to 5.25% from 5.10%, thus setting a borrowers’
The Reserve Bank of New Zealand (RBNZ) today announced that it will tighten lending rules for mortgages from 1 November, but expects banks to comply with the “spirit” of the new rules immediately. Specifically, the new rules will see banks now restricted to just 10% of the new lending for mortgages that make up over
CBA has released internal data on lending, which shows that new mortgage lending eased in August amid lockdowns. The share of fixed rate lending also eased from recent highs: New lending for housing eased in August, with housing activity dampened by the lockdowns. The share of fixed rate lending remains high, but below recent peaks.
Shortening odds for the next Banking Royal Commission. UBS’s excellent George Tharenou: UBS mortgage survey implies material deterioration in Aussie loan standards UBS Evidence Lab surveyed ~900 Australians who took out a mortgage in the last year – conducted from 21 June to 5 July, at the start of lockdowns in over half of Australia
Recall the Hayne Banking Royal Commission’s very first recommendation, which was to maintain responsible lending laws: Hayne arrived at this recommendation after observing multiple cases of predatory lending over the Royal Commission’s 12 month deliberation. Also recall that Treasurer Josh Frydenberg tried to repeal these responsible lending laws, claiming they are essential to helping the
New data shows the number of lenders mortgage insurance (LMI) policies have risen by 25% in the last year: Data from Digital Finance Analytics shows the number of LMI policies taken out in Australia rose by 25 per cent from 218,593 in 2019 to 273,473 in 2020. More than 150,000 policies were taken out in
From the excellent George Tharenou at UBS Evidence Lab: 2021 UBS EL Mortgage survey implies material deterioration in loan standards UBS Evidence Lab surveyed ~900 Australians who took a mortgage in the last year – conducted from 21 June to 5 July, at the start of lockdowns in NSW and Victoria. The 2021 vintage is
Although the cash rate hasn’t budged since October last year, Australian mortgage rates continue to push lower, according to CoreLogic: According to CoreLogic, mortgage rates were 3 basis points lower over the month for existing owner-occupier loans and 1 basis point lower for new owner-occupier loans. However, fixed rates have begun edging higher. These have
RateCity has reported that the number of variable mortgage rates on its data base offered under 2% has jumped from 28 to 46 in just two months. Moreover, there are more than three times the number of sub-2% variable rates at the start of the year: “Since COVID, the battleground for the banks has been
