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.
According to Roy Morgan, mortgage stress plunged to a near record low in the three months to May, driven by the lowest mortgage rates on record alongside the rebound in jobs: New research from Roy Morgan shows an estimated 677,000 mortgage holders (17.3%) were at risk of ‘mortgage stress’ in the three months to May
The Commonwealth Bank bubble is continuing to burst today, hitting new intraday lows today: The chart is quickly forming a bearish descending triangle as well, so if we see a decisive break of the high $97 support area then deeper downside opens up. And with good reason. The valuation remains extreme, completely out of whack
The Reserve Bank has repeatedly said that the prospect of negative interest rates in Australia is highly unlikely. However, the Australian Prudential Regulation Authority (APRA) has advised that it raised the prospect of zero or negative interest rates with the nation’s banks in late 2020, and asked them to ensure that their technology systems would
I recently picked the near top of the CBA bubble to start throwing pins. Since I began I first raised the notion that CBA is a preposterous bubble, it has deflated by 10%, more than its banking peers: Yet CBA remains stupidly overvalued. It is virtually no different to the other big three. Its yield
CoreLogic leading mortgage index is a pretty good way to track what’s coming in ABS owner-occupier data. Suddenly, it ain’t look so crash hot: The index level is still high but the recent tumble is quite substantial and steep relative to past winter pullbacks. This may reflect lockdowns or just be a part of the
The Australian mortgage market remained red hot in May, hitting new all-time highs according to new data released today by the Australian Bureau of Statistics (ABS). The total value of new mortgage commitments rose by a seasonally adjusted 4.9% in May 2021 to be up 95.4% year-on-year: As shown above, the record increase in new
The Reserve Bank of Australia (RBA) yesterday released household finances data for the March quarter of 2021. This data showed that the ratio of household and mortgage debt to disposable income rose slightly to 180.9% and 138.8% respectively over the March quarter: Household debt is being driven by owner-occupier mortgages, where debt levels hit a
Investigative journalist Anthony Klan has done a terrific job exposing regulatory capture at ASIC, which has reportedly turned a blind eye to Westpac ripping off 915,000 superannuation account holders of $1.65 billion. Worst of all, the head of ASIC’s superannuation enforcement is none other than a former Westpac lawyer: The corporate regulator has taken zero
APRA monthly banking statistics are out and show that investor mortgages are still some distance from triggering macroprudential tightening. May numbers showed monthly growth slowing as Westpac pulled back though this looks more likely to be a portfolio adjustment to me: Even so, at just 1% year-on-year growth, investors mortgages from the big eight is
The Reserve Bank of Australia (RBA) has released its private sector credit aggregates data for the month of May. Quarterly mortgage credit growth continued to firm, rising for the 10th consecutive month to 1.6% – the highest rate of growth since August 2017: Owner-occupiers continue to drive mortgage growth, rising by 2.0% over the quarter
Moody’s with the note: As economic recoveries proceed at different speeds and stages around the globe, there is rising interest about when normalisation of monetary policy will begin. Many central banks have had interest rates sitting at the lower bound since providing unprecedented monetary support at the height of the global pandemic. Normalisation of the
For the past month, I have been warning of the inflating Commonwealth Bank share price bubble. Last week it reached a preposterous 22x forward earnings, far above any rational valuation and 50% above the value of its identical peer banks: This utter stupidity, doubtless driven by a mad dash for yield, even though CBA’s dividend
In the Q&A to yesterday’s Keynote Address at the Australian Farm Institute Conference, RBA Governor Phil Lowe stated that the Council of Financial Regulators (i.e. RBA, Treasury, APRA and ASIC) are actively looking at macroprudential tools to curb the mortgage/property market (listen from around the 34 minute mark): “The Council of Financial Regulators meeting last
It’s getting amusing. Australia’s largest utility, the Commonwealth Bank, is being historically rerated as a wildly prospective growth stock. It has now reached 22x forward, very much in line with the kind of valuations we see for FAAMGS and similar quality stocks with spectacular growth, earnings reliability and global domination: I guess all of these
Digital Finance Analytics (DFA) has released its mortgage stress figures for May, which shows that around 41% of households remained ‘mortgage stressed’, up significantly from the pre-pandemic level of 32.9%: Martin North explains the rise in mortgage stress as follows: Our approach to measuring stress is unique in that we examine household cash flow –
CoreLogic has released new data showing the increasing risk profile of Australian mortgage lending as investors have flooded back into the market. While the percentage of high loan-to-value ratio (LVR) lending fell over the March quarter to 10.4% from 11.3% – likely reflecting the reduction in first home buyers active in the market: The percentage
Goodbye TFF, goodbye rock bottom mortgages. ANZ just double-hiked its fixed-rate mortgages on the four year to 2.49% and five year to 2.69% The discounted variable is at 1.94%. This process will continue for months yet as banks are forced to refinance into more expensive wholesale debt as the RBA ends its Term Funding Facility
Is the Commonwealth Bank now a tech growth stock? Because it sure ain’t trading like a bank. You know, the boring, slow, reliable dividend growth of a utility. None of that, thanks. Apparently, it’s a 21x forward earnings, massively margined, FAANG or similar. The highest ever over-valuation by a country mile: The other banks are
For years I thought it would prove to be our downfall. The immense borrowing that our banks did offshore to leverage mining income into the great property bubble. Largely this was a failure of imagination because I never thought we’d be able to do QE without a collapsing currency. But then the pandemic came and
The AFR reported that the proportion of landlords negatively gearing rental properties fell to 58.6% in 2018-19, according to the latest Australian Taxation Office (ATO) statistics. This was the lowest level on record and well down on the peak of 69.6% in 2007-08. There were also 19,113 fewer negatively-geared landlords than in 2017-18, representing the
Another month has gone by and mortgage stress continues to grow, according to Digital Finance Analytics as reported in The AFR: “Many households in stress have less hours worked than they want, and no income growth. Bigger mortgages by first time buyers and equity drawdowns are lifting repayments as lending standards ease and more interest-only
UBS with the note: April home loans up-crash 86% since May; average OO loan jumps 20% vs Aug The housing market ‘up-crash’ is still accelerating. Home loan values in Apr-21 surged 3.7% m/m, to a record high, up 86% since May-20. Average loan size since Aug-20 jumped 20% for owner-occupiers to $542k; & investors +10%
On Friday, the Australian Bureau of Statistics (ABS) released data on new finance commitments, which showed booming growth in both owner-occupied and investor mortgages. As shown in the next chart, owner-occupied mortgage commitments soared 70% in the year to April 2021, whereas investor mortgage commitments surged 63%: As regular readers know, the growth in new
The Australian mortgage market remained red hot in April, hitting new all-time highs according to new data released today by the Australian Bureau of Statistics (ABS). The total value of new mortgage commitments rose by a seasonally adjusted 3.7% in April 2021 to be up 68.2% year-on-year: As shown above, the record increase in new
RBA Governor Phil Lowe last year endorsed Treasurer Josh Frydenberg’s proposal to axe responsible lending rules, telling the Standing Committee on Economics that Australian mortgage restrictions had become too strict and were constraining the economy: “We can’t have a world in which, if a borrower can’t repay the loan, it’s always the bank’s fault. On a
The support for mortgage holders over the past 18 months has been extraordinary. From suspended interest payments to cratered fixed interest rates, the worst of times was suddenly transformed into the best of times for the most leveraged. But those concessions are now ending as the RBA’s TFF rolls off and fixed rates rise. Plus
The Reserve Bank of Australia (RBA) has released its private sector credit aggregates data for the month of April. Quarterly mortgage credit growth continued to firm, rising for the 9th consecutive month to 1.5% – the highest rate of growth since September 2017: Owner-occupiers continue to drive mortgage growth, rising by 1.8% over the quarter
More than 33,000 Australians and 125 community groups recently signed an open letter against the Morrison Government’s legislation to abolish responsible lending laws, which are currently sitting in limbo in the Senate. As we know, the Hayne Banking Royal Commission’s very first recommendation was to maintain these responsible lending laws, which came after observing multiple
CBA latest internal lending data shows a record boom in fixed rate mortgage lending. As shown in the next chart, new lending for housing was up 50% year-on-year in April despite falling over the month: The average loan size has rocketed higher over the past few months. Rising dwelling prices mean that buyers generally need
As we know, the Hayne Banking Royal Commission’s first recommendation was to maintain responsible lending laws: The Hayne Royal Commission came to this recommendation after observing multiple cases of predatory lending over its 12 month deliberation. Despite this recommendation, Treasurer Josh Frydenberg is currently seeking to abolish responsible lending laws following pressure from the banking
