Australian banks

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.

1

Moody’s: Mortgage delinquencies head for GFC highs

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

19

Mortgage rate war heats up

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

75

Aussie banks extend mortgage repayment freeze

 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

28

Westpac wins responsible lending appeal

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

14

Financial regulators demand banks lend at any cost

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

19

Banks and APRA kick can off mortgage freeze cliff

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

60

Australia’s mortgage time bomb hits $176 billion

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

35

Banks kick can on mortgage repayment cliff

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

41

$173b mortgage cliff beckons for Australia

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

6

Credit Suisse: Australian credit impulse shock ahead

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)

9

ME Bank dills face the music

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

14

Aussie mortgage defaults on the march

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

1

Aussie credit growth screams deleveraging

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

36

Mortgage repayment cliff beckons

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

4

Scomoprime brims over

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

2

Genworth downgraded on Scomoprime

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

69

Banks tighten screws on mortgage borrowers

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

1

The battle to lift the yield curve

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