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.

14

CBA: Mortgage lending strong again in September

According to CBA’s internal data, Australian mortgage lending strengthened further in September, up 30% year-on-year: However, average loan sizes are shrinking; albeit are still higher year-over-year: The share of fixed rate lending remained at high levels, driven by fixed rates being lower than variable rates: Lending for renovations continued to grow, likely driven by people

9

Bankers exact their revenge upon ASIC

Via Ian Rogers at Banking Day: The corporate watchdog has lost its key (and fairly recently-hired) attack dog with the resignation of Daniel Crennan, the deputy chair of the Australian Securities and Investments Commission. Crennan was the person brought in to chase and nail the corporate crooks down in court. His resignation from his ASIC

16

Mortgage stress near record lows?

According to Roy Morgan Research, Australia’s mortgage stress is running near record lows due to around 400,000 mortgage holders on repayment holidays: New research from Roy Morgan shows an estimated 751,000 mortgage holders (20.2%) were at risk of ‘mortgage stress’ in the three months to August 2020 as Australia navigated its way through the COVID

14

BOQ’s extraordinary loan deferrals

Via Banking Day: Exposure to the healthcare, property and construction sectors in its SME banking division and to Queensland tourist districts in its home lending business account for Bank of Queensland’s high rate of loan deferrals. Last month, when APRA released loan deferral data at the lender level, BOQ had the highest level of deferred

12

Mortgage repayment cliff still hangs over property market

The Australian Bankers Association (ABA) has released new data revealing that the number of Australians that have deferred repayments on bank mortgages has fallen to 270,000 from a peak of around 500,000 in June: In late June the number of loans which had been deferred by Australian homeowners and businesses peaked, with around 500,000 mortgages,

6

Reading Bill Evans’ mind

Find Bill Evans below delivering his ringing endorsement of what was clearly an outlier result for Westpac consumer sentiment yesterday: Look at the Westpac versus ANZ result: Both are post-budget. I’m not arguing that the ANZ result is more right. But I’d suggest taking the average of the two is a more sensible approach than

17

Aussies furiously repaying mortgages

Data from Firstmac shows that there was a sharp rise in the proportion of the non-bank lenders’ customers who chose to make additional mortgage repayments in the September quarter. CFO James Austin says this suggests that consumers are being cautious in the current economic environment and opting to reduce their mortgage rather than spend their

19

Insolvent CBA oligarchs crush debate

Via Banking Day today: Retail shareholders have accused Commonwealth Bank of attempting to sanitise Tuesday’s virtual AGM amid allegations that online questions submitted to the board by stakeholders were not aired at the meeting. The bank’s virtual AGM ran for only two hours, making it the shortest annual meeting in more than a decade. CBA’s

34

Why insolvent CBA must cut Matt Comyn’s salary by 70%

Via Domain: There has been intense scrutiny over pay for top banking executives since the damaging revelations of the Hayne royal commission. Last week the Reserve Bank of Australia said the banking regulator would soon resume work on ensuring executive pay was tied to targets that encourage good practice and culture. CBA chief executive Matt Comyn is

12

Neobanks turn nonsense banks

Via Banking Day: Deposit interest rates are tending to zero right across the banking industry, and a brazen, stay-in-business pricing decision from Xinja Bank will shock competitors as much as their customers. “We will continue to pay interest only on amounts up to A$150,000 in your Stash account. Any amount above that will not earn

3

S&P: Aussie banks to struggle

Via Banking Day: The recovery for Australia’s banks will be “a drawn-out affair”, and they will struggle to regain pre-COVID earnings metrics even as credit losses recede, according to a new report from S&P Global Ratings. Weak business and consumer sentiment is likely to remain the main impediment to credit growth. “In our base case,

4

First home buyers drive mega mortgage boom

The Australian Bureau of Statistics (ABS) has released housing finance data for August, which revealed a massive lift, led by first home buyers. The below chart plots the time series: Total new mortgage commitments (excluding refinancings) surged by 12.6% in August, with owner-occupied mortgages surging 13.6% and investor mortgages rising 9.3%. Year-on-year, total new mortgage

34

Mortgage rates set to tumble below 2%

The latest indicator mortgage lending rates from the Reserve Bank of Australia (RBA) revealed that the average discount variable mortgage rate was just 3.65% at the end of September, whereas the average 3-year fixed rate was even lower at just 2.35%: According to RateCity, mortgage rates offered by Australia’s big four banks could fall below

8

Financial regulators turn credit racketeers and kneebreakers

Public interest anybody? Via the Council of Financial Regulators turned bank credit racketeers and kneebreakers: Quarterly Statement by the Council of Financial Regulators – October 2020 The Council of Financial Regulators (the Council) held its regular quarterly meeting on Tuesday, 29 September. The key issue discussed was the role of the financial sector in supporting

11

Will mortgage holidays come to a crashing halt?

That’s the question asked by the ABC’s Daniel Ziffer in the segment above. Ziffer’s accompanying article highlights the problem awaiting the housing market and economy: ‘Extend and pretend’ The good news is that almost half of customers who deferred mortgages intend to revert to normal payments, according to new data from banking analysts at UBS.

141

Crazy policy moves to ignite property?

According to Canstar’s Steve Mickenbecker, the typical buyer could expect to have an extra $70,000 to spend on a home if the Morrison Government is successful in axing responsible lending rules: If requirements to assess borrowers’ expenses ease, an average buyer may see a jump in their purchasing power by about $70,000, Canstar group executive

7

Australia’s mortgage cliff still towers over property market

The Australian Prudential Regulatory Authority (APRA) has updated its statistics on Australian loan repayment deferrals, which reveals that there were still $229 billion loans outstanding as at 31 August, accounting for 8.5% of total loans outstanding by value: Of these, $160 billion of deferred loans were mortgages, accounting for 9.0% of total mortgages outstanding. In

18

Should bankers or Australians get RBA “monopoly money”?

Rentier HQ at the AFR, governed by “businessomics” doyen Michael Stutchbury, is in no doubt who should get the free “monopoly money”. It is not you: …using monetary policy to support the economy should not be confused with “funding” any level of fiscal policy stimulus by issuing Monopoly money. …As Reserve Bank governor Philip Lowe

98

Let’s get serious. What other crazy stuff can blow off house prices?

I’m not at all convinced that scrapping responsible lending rules will do it. The headwinds for SE property are immense. But the intention is clear, as is the bonkers mentality apparent in the Morrison Government to do it. So, what else can the bubble managers come up with to blow the bubble bigger? The first