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.
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
I’ve not much to add to this beyond an ennui of exhausted disgust. Here’s evil Anna Bligh’s latest take on the restoration of criminal banking proposed in Frydenprime: The Australian Banking Association has welcomed proposed changes to the nation’s consumer credit laws. “It is important to ensure that these changes strike the right balance between
Via the ABC: “Flabbergasted.” That’s the universal response I’ve been hearing from consumer rights advocates to the Federal Government’s proposed abolition of the responsible lending obligations. They simply can’t understand what the Government is aiming to achieve by freeing banks from their legal obligation to check whether potential borrowers can afford to repay a loan
Ahead of the anticipated announcement of the Federal Governments trashing of responsible lending laws by moving oversight of financial lending from ASIC to APRA, Gunnamatta spoke with David Llewellyn-Smith and Leith van Onselen about the implications of the move, and how this positions the Australian economy. The sound is a touch raw, and the discussion
If you want a prime example of why Australia is the property equivalent of a narco state, read on below. We are only around 18 months out from the Kenneth Hayne banking royal commission, which lambasted Australia’s banks for irresponsible lending. Yet Treasurer Josh Frydenberg has amazingly announced the scrapping of responsible lending laws: Responsible
A consortium of consumer groups have rightfully slammed the Morrison Government’s planned axing of responsible lending laws, issuing the following media statement: MEDIA STATEMENT FRIDAY 25 SEPTEMBER 2020 Consumer groups slam move to remove responsible lending laws Removing credit protections will cause harm to people and the economy CHOICE, Consumer Action Law Centre, Financial Counselling
Via Banking Day: Small lenders have hit out at the Reserve Bank’s access rules for its Term Funding Facility, arguing that it is delivering a big funding “free kick” to the major banks at the expense of competition in the home loan market. Under the A$200 billion funding program set up in March to help
Via Westpac:
Via APRA in a letter to ADIs: APRA has received and completed its review of all ADI comprehensive plans for the assessment and management of loans with repayment deferrals, provided in response to APRA’s 9 July letter to all ADIs. Where applicable, any entity-specific feedback, or clarifying questions have been facilitated by APRA’s supervisory teams. APRA acknowledges
Evans & Partners’ Matthew Wilson is particularly critical of allowing banks to treat frozen loans as performing until 31 March 2021. Wilson claims the decision to “amend, extend and pretend” is not just delaying the inevitable but also making the eventual hangover worse. He also believes repayment holidays have contributed the phenomenon of “ghosting”, whereby
Yep. Via Fitch: Fitch Ratings has maintained the Negative Outlook on the ratings of Australia’s four largest banks to reflect the downside risk to its base case; the four banks are Australia and New Zealand Banking Group Limited (ANZ, A+/Negative/a+), Commonwealth Bank of Australia (CBA, A+/Negative/a+), National Australia Bank Limited (NAB, A+/Negative/a+) and Westpac Banking
According to Richard Gluyas at The Australian, Australia’s major banks have deployed more staff to their financial hardship units as loan deferral periods for mortgage and small business customers begin to wind down. The banks are also anticipating a sharp rise in loan defaults as government stimulus measures begin to be scaled back. National Australia
More capital from the Aussie ponziteers: The Reserve Bank’s – Te Pūtea Matua – latest stress test of New Zealand’s banks illustrates the benefit and necessity of shoring up bank capital in the good times to provide resilience. The COVID-19 pandemic has demonstrated that large shocks can occur with very little warning. “The onset of
According to CBA’s internal data, Australian mortgage lending surged again in August: New lending for housing rose again in August. A recovery in lending is one factor behind our view that dwelling prices will fall only modestly over the next 6months. And we expect dwelling prices to rise solidly in H2 21 (see here). The
A nice post from Chris Joye at Livewire: I was recently asked whether it is really true that the AA and AAA rated state governments are having to pay materially more to raise capital to fund their budget deficits than Australia’s banks, which all have lower credit ratings—and in many cases substantially lower ratings in
Australian Bankers Association (ABA) CEO, Anna Bligh, last week announced that banks would commence “the largest ever customer contact process in the industry’s history” as it seeks to contact around 400,000 customers that have deferred repayments on around $167 billion worth of mortgages. According to The AFR, one in five deferred mortgage customers have “ghosted”
Via Fitch: Pandemic Pressures ABS Performance Record High Delinquency:Both 30+ and 60+ day quarter-end arrears reached record highs of 2.7% and 1.7%, respectively, by end-2Q20. The increase in delinquencies reflects the impact of the coronavirus pandemic on individual borrower and business income; payment assistance provided by lenders has been mitigating some of the impact on
Mortgage forbearance doesn’t come cheap. Via Banking Day: The prospects of real wage growth for thousands of workers in the financial services sector are waning after Commonwealth Bank stumped up a low-ball pay offer in its current round of enterprise bargaining talks. The Finance Sector Union has rejected the bank’s offer which provides for rises
