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.


CBA bubble bursts as property ponzi engulfs banks

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,


Negative equity threat as home owners “sleepwalk into disaster”

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


APRA waves macroprudential stick at banks

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


Aussie mortgage growth begins to ease

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,


APRA jacks mortgages buffer 50bps

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


Australian mortgage demand cools

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


Mad Macquarie’s mortgage mayhem

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


It’s official, macroprudential mortgage curbs are coming

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


Banks so flush, no go for repo

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


Frydenberg: Get ready for macroprudential mortgage curbs

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


CBA goes it alone on macro-prudential

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’


RBNZ tightens macro-prudential screws. RBA delays

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


Australia: the land of easy mortgage credit

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


Aussie mortgage rates continue to push lower

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


Australian mortgage demand still red hot

The Australian mortgage market rose in July despite lockdowns, 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 0.2% in July 2021 to be up 68.2% year-on-year: As shown above, owner-occupiers have driven mortgage demand this cycle, whereas investor


Michael West: Banks shamelessly rorting RBA’s bail-out fund

The Committed Liquidity Facility (CLF) was established in late-2011 in order to meet the Basel III liquidity reforms. Since January 2015, those ADIs to which APRA applies the Basel III liquidity standards have been required to hold high-quality liquid assets (HQLA) sufficient to withstand a 30-day period of stress under the liquidity coverage ratio (LCR)


CBA bubble resumes popping

The CBA bubble has had a rough couple of days since its results exposed it for the revenue growthless utility that it is. It’s been more or less straight down since then, setting up a spectacular double-top chart pattern: It remains spectacularly overvalued at nearly 20x NTM, versus its peers: And other GSIBs in the


Banker: Rapid house price growth “fantastic”. Don’t regulate.

Bendigo & Adelaide Bank’s net profit for 2020-21 rose 172% to $524 million, with its cash earnings rising 51% to $457.2 million. Deposit growth increased by 14.2% whereas applications for loans surged by 36.2%. Commenting on the current heat in the housing market, MD Marnie Baker said that rapid price growth is “fantastic” and claimed