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 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
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
For the eighth time in two years, Westpac warns: $816m is new.
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
Via the excellent Jonathon Mott at UBS: What to expect with the 2H20E bank results starting Thursday 29th October The 2H20E reporting season (to September) will be unusual, with the banks operating in a false economy, given: almost half the labour force was on wage subsidies, unemployment benefits or employed by the government; mortgage &
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
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,
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
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
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
The Aussie dollar is getting the treatment this morning: Bonds are bid: The ASX bath of blood is parting: It’s not Big Iron: It’s not Big Gas: It’s not Big Gold: It’s all about Big Banks: Which are bubbling up to new, ridiculous multiples: Why? Some hope for the property bubble, I hazard. But, mainly,
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
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
From Westpac: Housing finance approvals came in well above expectations, the total value of new loans surging 12.6% in August to be up over 30% in three months. With the earlier COVID shock to finance approvals actually quite mild in the scheme of things, the total value of loan approvals is, somewhat remarkably, over 9%
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,
CBA says that it has already reached capacity for first home loan deposit scheme (FHLDS) applications: The Commonwealth Bank has confirmed it is no longer taking applications for the first home loan deposit scheme, which is allowing people to acquire a mortgage with as little as a 5 per cent deposit, saying it has run
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
The Australian dollar is weak through the morning: Bonds have eased but not much following the deflationary Depressionberg Unstimulus: ASX likes it for no apparent reason. Unless you employ lots of young people to rort the taxpayer it’s a bust. It looks neutral technically: Big Iron is up. I’m still waiting for more seasonal downside
Via Martin North: We have updated our Core Market Models and scenarios with the latest household financial stress data to the end of September 2020. We discussed this in our live show last night: Overall mortgage stress eased back to below 40% of borrowing households at 39.5%. But it remains very high. This is measured
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
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
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.
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
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
APRA has released its August lending data which we use to track growth trends in investor loans for property. After a big monthly spike in June as the economy reopened, July and August have both disappointed. Perhaps June was pent-up demand and August will certainly be hit by the Melbourne shock. Monthly growth for the
The Reserve Bank of Australia (RBA) has released its private sector credit aggregates data for the month of August 2020, which reveals that mortgage growth continues to hover near record lows: A chart plotting the long-run time series is shown below: Overall mortgage growth was 3.2% in the year to August, a fraction above all
Via the excellent Jonathon Mott at UBS: Sixth Vintage of the Australian Mortgage survey – focused on deferred loans From late July until Sept, UBS Evidence Lab anonymously surveyed 904 Australians who took out a mortgage over the last 12 months. The 2020 vintage is the sixth edition of this survey. This report focuses on
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
Via BOQ: 37bps is still pretty low and BOQ is exposed mostly to QLD where things are better…
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
