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.
NAB has begun restricting mortgage credit to older borrowers – a move that is expected to be replicated across the banking industry: At the stroke of a pen it’s just become a lot harder for older Australians to get a property loan… Since July 25 NAB has demanded applicants nominate a date of for their
Good work from Chris Joye today: One significant concern relates to record unofficial arrears in illiquid and subordinated bonds comprising “securitised” portfolios of Australian home loans, SME loans and consumer loans that are packaged up and sold to investors through residential mortgage-backed securities (RMBS) and asset-backed securities (ABS). We are particularly anxious about RMBS and
According to the Reserve Bank’s latest indicator lending rates, average mortgage rates have fallen to their lowest level on record at just 2.35% for 3-year fixed and 3.65% for discount variable: These are average rates of course, and much better deals – under 2% – can be gained from specific lenders, with juicy cash backs
Via the excellent Jonathon Mott at UBS: Two steps forward… one big step back? With Melbourne moving to Level 4 lockdown (all non-essential businesses closed), the outlook for the Australian economy and banks has deteriorated sharply. After a strong economic bounce from May until early July, this is a clear setback. While the assumptions underpinning
In other countries, this is called corruption. In Australia, it is the natural course of a political career. Via the AFR: It wasn’t until several hours after the state government brought down the shutters on retail and construction in Victoria that the Australian Banking Association was able to breathe a sigh of relief. With the
Via Crikey: A slow news day in a pandemic is a great time to trot out the old “wouldn’t it be a good idea to start a government-owned bank” story. What a fabulous concept. No wonder Labor’s shadow treasurer Jim Chalmers jumped at the chance to support the union-backed report from the Per Capita think tank. But wait. Wasn’t it Labor which sold the last government-owned
Today’s new mortgage data from the Australian Bureau of Statistics (ABS) recorded a rebound in June as COVID-19 restrictions were lifted: The next chart plots the time series: Total new mortgage commitments (excluding refinancings) rose by 6.2% in June, with owner-occupied mortgages rising 5.5% and investor mortgages rising 8.1%. Year-on-year, total new mortgage commitments (excluding
Via UBS’ excellent Jonathon Mott: SME health-check – deteriorating since the Melbourne lockdown Our recent SME In-depth Report laid out key indicators to watch for the health of the sector. Higher frequency data by both the ABS and ACA Research indicates that SME performance has worsened since Melbourne re-entered lockdown. ABS data indicated that 50%
Via APRA: Many authorised deposit-taking institutions (ADIs) have granted temporary relief to borrowers impacted by COVID-19, allowing them to defer loan repayments for a period of time. To provide greater transparency of loan repayment deferrals at the industry level, APRA is publishing the aggregated data obtained from all ADIs in Australia, excluding foreign branches. *the
Alan Kohler has joined the chorus warning that Australia faces a tsunami of mortgage defaults once repayment holidays and emergency income support is unwound from October: Morgan Stanley commissioned a survey of mortgagors as part of some research on the impact of the coronavirus, and found that 55 per cent of them have received some
Via Banking Day: At-call and term deposit rates continued to fall last month, in what comparison site Mozo called “a significant retreat”. AMP made some of the biggest cuts, reducing the six-month introductory rate on its Saver account by 70 basis points to 1.5 per cent and the ongoing bonus rate on its Bett3r account
The Australian dollar is struggling this morning: Bonds the usual flatline: XJO is soft” Big Iron is up: Big Gas not: Big Gold is: Big Banks have been sucked back into the bath of blood: WBC technicals tell the tale. Supports all broken: Property crash!
The Reserve Bank of Australia has released mortgage data for June, which reveals that mortgage credit growth continues to soften, driven by fleeing property investors. As shown in the next chart, overall mortgage growth fell to just 0.7% over the June quarter: Growth has been dragged down by property investors where demand continues to fall,
Via Banking Day: A large write-down and additional reserving tipped Genworth Mortgage Insurance Australia into loss in the first half of the year, but the company is confident it is well positioned to deal with anything COVID throws at it. Genworth reported a loss of A$90 million for the six months to June 2020, compared
Never take your Aussie house price falls for granted. Via APRA this morning comes June lending data. Month on month: ANZ CBA MAC NAB WBC BOQ BEN SUN Total Jun-20 0.7 0.2 1.1 -0.3 0.3 -0.1 1.1 -0.4 0.2 May-20 0.4 -0.1 -2.0 -0.6 -0.4 -0.1 0.9 -0.1 -0.3 Apr-20 -0.1 0.0 2.3 -0.7 -0.7
As we know, early withdrawals from superannuation ballooned to $28.0 billion in the week ended 19 July: The Australian Treasury now expects about $41.9 billion in total to be withdrawn from super funds, compared with its previous forecast of $29.5 billion. Analysis of banking data shows that most of this money is being saved, used to
Earlier this month, the Australian Prudential Regulatory Authority (APRA) released data confirming that just under half a million borrowers had deferred repayments on $192 billion worth of mortgages: These mortgage deferrals comprise 11% of all housing loans, according to APRA, with around on-third of property investors with mortgages taking advantage of the repayment holidays: A
So shockingly predictable (if you’ll pardon the oxymoron): The Australian Prudential Regulation Authority (APRA) has updated its capital management guidance for banks and insurers, in particular easing restrictions around paying dividends as institutions continue to manage the disruption caused by COVID-19. APRA’s updated guidance replaces its recommendation in April this year that banks and insurers “seriously consider
Nice one. Via Banking Day: ANZ is calling on Melbourne staff to make sacrifices for the bank by spending holidays confined to their lounge rooms and frost-bitten backyards. The bank confirmed to Banking Day on Monday it would continue to direct Australian bank staff to run down their accrued holiday leave entitlements before the end
Oh dear: Sounds like most are violations to me. WBC has made a $900m provision for the fine. But AUSTRAC was pressing for $1.5bn even before this. There may be more kiddie porn in this as well. It could well be material.
Via AFR: The bleak outlook is driven not by the potential impact of the pandemic on the CBD office market, but the sharp pullback in values and rents due to a cyclical downturn that was already well under way before the coronavirus outbreak, Goldman Sachs analysts said in a recent client note. …Goldman Sachs expects
Via a smug RBA putting the cue in the rack. Christopher Kent: Introduction In the early stages of the pandemic, there was extreme uncertainty about how much economic activity would decline and how long the economic disruption would last. It was also uncertain how much support would be provided by monetary and fiscal authorities. And
The more things change and all of that. Via Banking Day: Consumer groups and community legal centres have called for responsible lending law reform in the wake of ASIC’s decision not to take its case over Westpac’s alleged breaches of responsible lending any further. Late last month, the Full Federal Court rejected ASIC’s appeal against
Michelle Bergmann from the Reserve Bank of Australia (RBA) has released research on the drivers of Australian mortgage defaults. The paper contends that two pre-requisites need to be met before a mortgage holder defaults: a reduction in earnings, resulting in homeowners unable to meet monthly repayments; and negative equity. Below is the summary: What causes
A BOQ warning today: Expect these warnings to rain down from all banks for the foreseeable future.
Australia’s mortgage market is experiencing a strange duality. On the one hand, borrowing has never been cheaper. Mortgage rates have collapsed to record lows and there is a rush of existing mortgage holders to refinance to a cheaper rate: On the other hand, the flood of applications to refinance has caused processing bottlenecks at banks,
Via the AFR: The Australian Securities and Investments Commission has decided not to appeal to the High Court its case against Westpac for alleged responsible lending failures, after the heads of the Reserve Bank of Australia and Treasury both privately warned it would exacerbate economic uncertainty caused by COVID-19. Sources told The Australian Financial Review
Via the excellent Jonathon Mott at UBS: Direct exposure to small businesses – 18% of SME book in deferral Limited disclosure is available breaking down the 220,000 business loans (total ~$60bn) that are currently on loan repayment deferral until Sept/Oct (or Mar-21). ANZ and WBC provided a broad industry breakdown of their deferred business loans,
Via Banking Day: Extended loan repayment deferrals could cost the big banks anywhere from A$700 million to $1.1 billion in lost revenue, according to new analysis. Macquarie Securities said the extension of loan repayment deferrals for another four months, along with the extension of APRA’s regulatory concessions, gives the banks extra time to deal with
Straight out of Yes Minister this one: Small employers will be given greater access to a $40 billion loan scheme to help them through the recession when the federal government overhauls its flagship JobKeeper payment this week. The expanded loan scheme will offer companies four times the amounts previously allowed up to a new cap
