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.

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

16

Enjoying yourself, Evil Anna?

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

98

Will The Empty Chair block Frydenprime?

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

95

MB Radio: Irresponsibility becomes the new black

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

181

Kenneth Hayne clears 2023 diary as Frydenprime arrives

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

38

Consumer groups slam Coalition’s gutting of responsible lending laws

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

12

Should banks make grab for early super?

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

18

Mortgage holidays will leave nasty hangover

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

3

Fitch: Aussie banks remain on downgrade watch

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

47

Banks brace for tidal wave of mortgage defaults

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

94

Revenge of the mortgage ghosts

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”

6

Auto loan delinquencies hit record

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

7

CBA kicks off national wages demolition

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