K62 Finance

Mortgage stress increased in June, but set to ease in the months ahead after the Stage 3 tax cuts

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Original article by Roy Morgan
Market Research Update – Page: Online : 23-Jul-24

New research from Roy Morgan shows that 1,602,000 mortgage holders (30.3%) were ‘At Risk’ of ‘mortgage stress’ in the three months to June 2024. This represents an increase of 88,000 (+0.6%) on a month earlier, but is below the record highs reached earlier this year. The RBA left interest rates on hold during its June board meeting, and there is no RBA board meeting in July. The level of mortgage holders ‘At Risk’ of ‘mortgage stress’ in June is set to fall over the next few months after the Stage 3 income tax cuts were introduced from the start of July. Compared to May 2022, when the RBA began a cycle of interest rate increases, the number of Australians ‘At Risk’ of mortgage stress has increased by 795,000. Meanwhile, the number of mortgage holders considered to be ‘Extremely At Risk’ of mortgage stress is now numbered at 1,016,000 (20.0% of mortgage holders), which is significantly above the long-term average over the last 10 years of 14.5%. These are the latest findings from Roy Morgan’s Single Source Survey, based on in-depth interviews conducted with over 60,000 Australians each year, including over 10,000 owner-occupied mortgage-holders.

CORPORATES
ROY MORGAN LIMITED

Macquarie Bank has the wealthiest customers

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Original article by Roy Morgan
Market Research Update – Page: Online : 10-Jul-24

New financial data from Roy Morgan’s Wealth Report shows that among the larger banks, Macquarie has the wealthiest customers. Macquarie customers’ net wealth per capita is a market leading $943,000. Macquarie customers have higher incomes than customers of other large banks, and they are also the most likely to own or to be paying off homes, the main source of Australians’ wealth. In second place is St George with net wealth per capita of $662,000. St George’s customers are centred in Sydney where housing prices are the highest in the country, contributing to that city having greater per capita wealth than elsewhere in Australia. In third please is Westpac, with net wealth per capita of $646,000, the highest of the top four banks. Westpac customers are more likely to own property than customers of the other top four banks. They are also older and more likely to be Baby Boomers, giving them more time to have accumulated wealth. Meanwhile, the Commonwealth Bank has the lowest net wealth per capita of the banks reported ($474,000). Its customers are more likely to be Gen Z than customers of the other large banks. The latest data covers the 12 months to March 2024. Over this period net wealth per capita among all Australians aged 14+ stood at $503,000. Net wealth per capita is often below average among customers of the smaller regional banks and credit unions.

CORPORATES
ROY MORGAN LIMITED, MACQUARIE BANK LIMITED – ASX MBL, ST GEORGE BANK LIMITED, WESTPAC BANKING CORPORATION – ASX WBC, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

Average home loan surges to record high

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Original article by Nick Lenaghan
The Australian Financial Review – Page: 30 : 9-Jul-24

Data from the Australian Bureau of Statistics shows that the average new home loan for owner-occupiers reached a record high of $626,055 nationally in May. The average size of new home loans reached fresh highs in Queensland, South Australia and Western Australia in May. NSW still boasts the nation’s highest average home loan, at $767,584; however, this is below the state’s peak of $803,235 in early 2022. In contrast, the average home loan in Victoria fell to $601,891 in May, compared with a peak of $651,364 in 2022. Sally Tindall of RateCity notes that home buyers are taking out bigger mortgage loans than ever, despite the cash rate rising to its highest level in 12 years.

CORPORATES
AUSTRALIAN BUREAU OF STATISTICS, RATECITY PTY LTD

Analysts warn on bank growth

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Original article by Cliona O’Dowd
The Australian – Page: 19 : 9-Jul-24

The share prices of Australia’s big four banks have risen strongly over the past 12 months, but Macquarie analysts have warned that the earnings outlook for the Commonwealth Bank, the ANZ, Westpac and the National Australia is weak. They note that the likelihood of there being a softer landing for the broader economy has diminished, and that extremely low impairment charges will hinder their earnings recovery in the medium term; Macquarie is underweight the banking sector over that period.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, MACQUARIE GROUP LIMITED – ASX MQG

Dead bank customers still charged fees

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Original article by James Eyers
The Australian Financial Review – Page: 17 : 3-Jul-24

The ANZ Bank says it has significantly increased the number of employees who manage deceased estates cases, after it was formally sanctioned for charging fees to customers who had passed away. The Banking Code Compliance Committee’s chairman Ian Govey says it generally only sanctions banks for the most serious and systemic breaches of the Banking Code of Practice, and ANZ’s non-compliance justified such action. ANZ has paid remediation of $3.2 million to 18,852 deceased estates since early 2024.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, BANKING CODE COMPLIANCE COMMITTEE

Defying gravity: CBA prepares to take on Wall Street’s biggest banks

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Original article by Eric Johnston
The Australian – Page: 13 & 21 : 2-Jul-24

The Commonwealth Bank of Australia is now the world’s 13th largest bank in terms of market capitalisation. CBA now boasts a market cap of $211bn ($US140.7bn), ranking it above global rivals such as Citi; it is also within reach of making the list of the world’s 10 biggest banks. The rise of CBA is particularly impressive given that it remains largely focused on the Australian market, with its international operations limited to a small subsidiary in New Zealand. It is also not regarded as a globally systemically important bank, which is generally a prerequisite for ranking amongst the 10 biggest banks.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

Mortgage stress down in May and set to fall further in the months ahead after the Stage 3 tax cuts begin

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Original article by Roy Morgan
Market Research Update – Page: Online : 26-Jun-24

New research from Roy Morgan shows that 1,514,000 mortgage holders (29.7%) were ‘At Risk’ of ‘mortgage stress’ in the three months to May 2024. This represents a decrease of 46,000 (-1.1%) on a month earlier and is now the lowest level of mortgage stress reached so far this year. The RBA left interest rates on hold during their June board meeting and there is no RBA board meeting to decide upon interest rates during the month of July. The level of mortgage holders who are ‘At Risk’ of ‘mortgage stress’ in May is the lowest rate since July 2023 (29.2%), and the first time this year the rate has dropped below 30% of mortgage holders. The lower level of mortgage stress in recent months has been driven by rising household incomes, which has reduced the financial pressure on some mortgage holders. However, the number of Australians ‘At Risk’ of mortgage stress has increased by 707,000 since May 2022 when the RBA began a cycle of interest rate increases. Meanwhile, the number of mortgage holders considered ‘Extremely At Risk’ of mortgage stress is now numbered at 976,000 (19.9% of mortgage holders), which is significantly above the long-term average over the last 10 years of 14.4%. These are the latest findings from Roy Morgan’s Single Source Survey, based on in-depth interviews conducted with over 60,000 Australians each year, including over 10,000 owner-occupied mortgage-holders.

CORPORATES
ROY MORGAN LIMITED

Slowing economy puts RBA rate cut on cards: Minack

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 25 : 13-Jun-24

Market strategist Gerard Minack says monetary policy in Australia is "very restrictive" at present, noting that official interest rates are still lower than comparable countries. Minack addressed the Morgan Stanley Australia summit on Wednesday, stating that he expects the Reserve Bank to reduce the cash rate later in 2024 or in early 2025. Meanwhile, Morgan Stanley economist Chris Read said the central bank could increase the cash rate if inflation rises again. Market traders have fully priced in the cash rate remaining on hold until the end of 2024, and a rate cut in May 2025.

CORPORATES
MORGAN STANLEY AUSTRALIA LIMITED, RESERVE BANK OF AUSTRALIA

RBA rate rise still likely even after wage review

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Original article by Cecile Lefort
The Australian Financial Review – Page: 27 : 4-Jun-24

Su-Lin Ong from RBC Capital Markets says the Reserve Bank of Australia will most likely have welcomed the Fair Work Commission’s decision to limit the minimum wage increase to 3.75 per cent on Monday. Financial markets had been concerned that the minimum wage would be increased by at least four per cent, while economists had warned that a rise of this size would have complicated the RBA’s efforts to restore inflation to its target range. Bond traders have now priced in a 14 per cent chance of an interest rate rise by the end of 2024, while they have fully priced in a rate cut by August 2025.

CORPORATES
RBC CAPITAL MARKETS, AUSTRALIA. FAIR WORK COMMISSION, RESERVE BANK OF AUSTRALIA

‘Simply walking away’: Banks face branch closure crackdown as Senate probe exposes failures

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Original article by Matthew Elmas
The New Daily – Page: Online : 28-May-24

The Senate committee on regional affairs has released a report into bank closures in regional Australia, with the committee making a number of recommendations aimed at protecting regional communities from further branch closures. They include that access to cash should be considered an essential service and that the federal government should consider a new publicly owned bank that could service regional communities indefinitely, with Council of the Ageing chief executive Patricia Sparrow urging the government to "immediately action" the essential services call

CORPORATES
COUNCIL ON THE AGEING