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.

3

ANZ delivers double rate hike for fixed mortgages

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

8

And now for a Commonwealth Bank bubble

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

28

Negative gearing is yesterday’s problem

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

29

Mortgage stress numbers seem implausible

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

67

Mortgage market signals unprecedented property boom

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

12

Banks overwhelmed by rabid mortgage demand

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

7

Saul Eslake: Morrison mortgage reforms “crazy”

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

25

One Nation blocks Frydenberg’s irresponsible lending reforms

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

19

New buyers face rising mortgage stress

RateCity has released interesting data via Domain showing how new mortgage buyers are facing growing rates of mortgage stress, especially across Sydney and Melbourne. According to RateCity, the median buyer in Sydney needs to earn around $186,500 with a 20% deposit to avoid ‘mortgage stress’ – defined as spending more than 30% of a household’s

46

Sub-prime mortgages are back in vogue

As we know, the Australian Bureau of Statistics’ (ABS) latest lending data reported the biggest ever boom in mortgage finance commitments, up a whopping 55% in the year to March 2021: Amid the mortgage frenzy, there are increasing signs that lenders are dropping lending standards. The latest example came yesterday when NAB owned U-Bank announced

8

Mortgage brokers run off their feet

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

48

Bank of Mum & Dad creating “unequal housing market”

Last week, Tarric Brooker posted some stunning charts at News.com.au, gleaned from Digital Finance Analytics surveys, showing the record rise in financial assistance from the ‘Bank of Mum & Dad’, which is helping to fuel the boom in first home buyer (FHB) demand and Australian property values. Just prior to the pandemic, only 8% FHBs

18

Josh Frydenberg turns ASIC into paper tiger

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

46

APRA chief hoses down housing intervention

Australian Prudential Regulatory Authority (APRA) chairman, Wayne Byers, has hosed down speculation that the regulator would take action to cool Australia’s rapidly rising property market: “Risk for the financial system occurs when lending standards are poor or weak,” Mr Byres told a Committee for the Economic Development of Australia event. “We don’t see that up

29

The bank of mum and dad is back, bigger than ever!

With Australian property values soaring into the stratosphere, first home buyers (FHBs) are once again tapping the “Bank of Mum and Dad” in large numbers. In January 2020, prior to the coronavirus pandemic landing in Australia, a survey by Finder revealed that over half of Australian parents were directly subsidising the living expenses of their