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.


Why macroprudential mortgage curbs are harder this time around

Several commentators have questioned the efficacy of Australian financial regulators imposing macroprudential mortgage curbs, arguing that it would disproportionately harm first home buyers (FHBs) who tend to take out larger mortgages with smaller deposits: Alison Pennington, senior economist at the Australia Institute’s Centre For Future Work, claims macro-prudential tightening “would have unequal and unfair consequences


Corrupt APRA sets course for 2022 economic accident

As we know, the Australian Prudential Regulator, APRA, is corrupt. Its head, Wayne Byers, was re-appointed by Treasurer Frydenberg in the midst of the Hayne Royal Commission before it could bring down its findings on anything. A clear ‘jobs of the boys’ moment rendered appalling as the Hayne RC made clear how badly APRA had


Westpac may divorce New Zealand

Late last year, the Reserve Bank of New Zealand (REINZ) announced plans to increase tier one capital requirements for all systematically important banks to 16% of risk weighted assets, up from 13.5%. New Zealand’s big four Australian-owned banks were, therefore, placed directly in the REINZ’s cross-hairs given they comprise nearly 90% of the nation’s banking


CoreLogic: regulators aren’t about to rein-in risky lending

CoreLogic’s head of research, Eliza Owen, agrees that Australia’s financial regulators are unlikely to act quickly to rein-in ‘risky’ mortgage lending via macroprudential tightening. First, Owen notes that the proportion of interest-only lending remains at low levels (19.2% in December 2020), less than half the mid-2015 peak (45.6%): Second, while the proportion of mortgages made


Pfft, the RBA will not hit the housing brakes this year

The AFR is today reporting that house price controls are imminent from regulators: Apparently “pressure” is building on the RBA to slow house prices though from where that pressure is coming the article does not say (because let’s face it, there isn’t any). RBC says the RBA is readying macroprudential tools. These will include limits


Why you should refinance your mortgage

CoreLogic has released its March Housing Market Update report, which contains the below chart showing the sharp fall in mortgage rates over the past year across various owner occupied and investor loan types and terms. Specifically, the average housing lending rates for new loans declined 70 basis points for owner occupiers, and 70 basis points


Big Four pressure senators to pass irresponsible lending reforms

The Morrison Government recently put its proposed changes to responsible lending laws on hold, with the Senate now scheduled to vote on the bill in June. Banking industry leaders have been lobbying senators to pass the reforms, with National Australia Bank CEO Ross McEwan contending that scrapping the responsible lending laws will not result in


Mortgage war drops rates even lower

Despite the RBA cash rate remaining at a record low 0.1% for five consecutive months, Australian mortgage rates continue to drift lower. According to the RBA’s indicator lending rates, the average owner-occupied discount variable mortgage rate was a record low 3.65% in February, whereas the average 3-year fixed mortgage fell to only 2.19%: Rates available


Evil Anna summons two treasurers to Hades

Having swung from beloved Premier to banking lobbyist, it is clear that “Evil” Anna Bligh is the greatest public policy apostate in the Australian political economy (and that’s saying something). Yesterday, at The Australian, it was revealed that Belzebub’s handmaiden has summoned the two treasurers to Hades for a hot policy poker in the freckle:


The responsible mortgage lending fix is in

On Friday, the Senate Economics Committee released its assessment of the Morrison Government’s planned axing of responsible lending rules, which supported winding back regulations to support greater credit provision across the economy: The committee notes that a well-functioning credit market is essential for economic growth generally, and for Australia’s recovery from the COVID-19 pandemic specifically.


Mortgage war drops rates to new low

The floor continues to fall out from under the mortgage market, especially with respect to fixed rates. Since the beginning of the COVID-19 pandemic, fixed mortgage rates have experienced much bigger declines than variable mortgage rates, providing borrowers with opportunities to make big savings on their repayments. As shown below, the average rate applying to


Axing responsible lending will throw petrol on the housing bonfire

Economists and consumer groups have warned that the Morrison Government’s announced axing of responsible lending laws will fuel property inflation by enabling borrowers to take on more debt and bid up prices. Under the Government’s consumer credit amendment bill, which was introduced in December, responsible lending obligations will be removed from the national consumer credit


Will regulators intervene to tighten lending standards?

Just last week, Reserve Bank of Australia (RBA) governor Philip Lowe stated that lending standards remain sound but warned that they must continue to remain so given historically low interest rates and the recent surge in house prices. The Council of Financial Regulators (CFR), which is the coordinating body for Australia’s main financial regulatory agencies


Aussies are taking out and repaying mortgages at a record pace

Record low interest rates and households awash with stimulus money is having interesting effects on Australian borrowing habits. On the one hand, Aussies are taking advantage of the lowest borrowing rates on record to pile into the housing market, with new mortgage issuance running at all-time high levels in January, according to the Australian Bureau


The mortgage market has never been hotter

The Australian mortgage market has continued its record run, according to new data released today by the Australian Bureau of Statistics (ABS). Total mortgage commitments (excluding refinancings) rose another 10.5% in January to be up a whopping 44.3% year-on-year. This growth was driven by owner-occupiers, where mortgage commitments rose by 10.9% over the month to


Australian mortgage growth surges

The Reserve Bank of Australia (RBA) has released mortgage growth figures for January, which continued to strengthen on the back of owner-occupiers. Quarterly mortgage growth rose to 1.14% in January – the 6th consecutive monthly increase – and is now experiencing its strongest growth since September 2018 (see next chart). Owner-occupiers continue to lead the


How low can fixed mortgage rates go?

Fixed rates are all the talk in Australia’s mortgage market. Over the past year, fixed mortgage rates have experienced far larger declines than variable mortgage rates, thus offering borrowers huge opportunities for savings. As shown in the next chart, the average rate applying to existing 3-year fixed owner-occupied mortgages was only 2.20% as at January


Banks overwhelmed by unprecedented mortgage demand

All recent data shows that Australian mortgage demand is white hot. The official lending commitments data from the Australian Bureau of Statistics (ABS) showed that the value of new mortgages (excluding refinancings) issued in December surged to record highs following explosive 31% year-on-year growth. This growth was driven by owner-occupiers, where the value mortgages issued


Evil Anna: Banks to remain easy on distressed loans

Via Banking Day: Australian Banking Association chief Anna Bligh has given a commitment that her organisation’s members will continue to provide support to customers affected by the pandemic when the current loan deferral arrangements end next month. The ABA said banks were working directly with customers in hardship to work out an appropriate outcome. Bligh


Bank profits boom on impariment write-backs

Several things are working in favour of rising bank valuations favour now. The first is the steepening yield curve which always drives a bid for financials given it represents greater interest income for a borrow short, lend long business. The second is highlighted at Banking Day: Westpac booked an impairment benefit of A$501 million in