MORTGAGE LOANS – AUSTRALIA

UBS warning on household debt

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 21 : 19-Jan-18

New figures show that Australia’s household debt-to-income ratio has risen by three per cent to a record 199.7 per cent, which UBS notes is one of the world’s highest. The increase is largely due to the Australian Bureau of Statistics’ decision to include the debt of self-managed superannuation funds in the key indicator for the first time. UBS has forecast that the debt-to-income ratio will peak at around 205 per cent, and it has warned that rising household debt may affect demand for housing credit and the earnings of major banks. However, UBS is upbeat about the outlook for non-bank lenders.

CORPORATES
UBS HOLDINGS PTY LTD, AUSTRALIAN BUREAU OF STATISTICS, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

Interest-only loans plummet as banks clamp down on mortgage risk

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Original article by Michael Roddan
The Australian – Page: 13 & 14 : 16-Jan-18

New data suggests that the Australian Prudential Regulation Authority’s crackdown on interest-only mortgage loans is having an impact. Australian Fin­ancial Group’s latest mortgage index shows that 19 per cent of new mortgage loans in the December 2017 quarter were interest-only loans, compared with 47 per cent for the corresponding period in 2016. However, the size of the average mortgage loan rose by 2.8 per cent nationwide in the year to November, and by 4.3 per cent in Victoria.

CORPORATES
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, AUSTRALIAN FINANCE GROUP LIMITED – ASX AFG, MACQUARIE GROUP LIMITED – ASX MQG, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, DIGITAL FINANCE ANALYTICS, MOODY’S INVESTORS SERVICE INCORPORATED

Home loans break trillion dollar barrier

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Original article by Michael Roddan
The Australian – Page: 21 : 1-Nov-17

The Australian Prudential Regulation Authority has reported that the value of mortgage loans written for owner-occupiers rose by 0.5 per cent in September, to $A1.03bn. Meanwhile, there was 0.3 per cent growth across the mortgage lending sector during the month. Separate data from the Reserve Bank shows that there was 0.5 per cent growth in housing loans in September, while year-on-year growth rose from 6.4 per cent to 6.5 per cent. In contrast, annual growth in business lending was 4.3 per cent.

CORPORATES
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, RESERVE BANK OF AUSTRALIA, DIGITAL FINANCE ANALYTICS, BENDIGO AND ADELAIDE BANK LIMITED – ASX BEN, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, SUNCORP GROUP LIMITED – ASX SUN, MACQUARIE GROUP LIMITED – ASX MQG, ME BANK, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, WESTPAC BANKING CORPORATION – ASX WBC, UBS HOLDINGS PTY LTD

Housing affordability gets worse

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Original article by Michael Roddan
The Australian – Page: 20 : 19-Oct-17

A report from credit ratings agency Moody’s has warned that housing affordability has continued to decline across Australia. The firm estimates that mortgage repayments now account for 28.7 per cent of the average Australian couple’s monthly income, compared with 27.4 per cent in September 2016. Meanwhile, a survey by Fitch Ratings shows that just 34 per cent of bond investors regard a housing downturn as the biggest risk to the Australian economy, compared with nearly 50 per cent in 2016.

CORPORATES
MOODY’S INVESTORS SERVICE INCORPORATED, FITCH RATINGS LIMITED, RESERVE BANK OF AUSTRALIA, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY

345,000 Aussie mortgage holders have no real equity in their homes

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Original article by Roy Morgan Research
Market Research Update – Page: Online : 16-Oct-17

A Roy Morgan Single Source survey has found that 8% (345,000) of mortgage holders in Australia had little or no real equity in their home in the year to August 2017, compared with 7.1% in the year to August 2016. This is based on the fact that the value of their home is only equal to or less than the amount they still owe, placing them at considerable risk if they have to sell or prices decline. The survey also shows that Western Australia has the highest proportion of mortgage customers with no real equity in their home, at 14% (71,000), while Tasmania has the lowest proportion of mortgage holders with little or no equity in their home, at only 4.9% (4,000).

CORPORATES
ROY MORGAN RESEARCH LIMITED

Interest-only loans a timebomb for banks

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Original article by Michael Roddan
The Australian – Page: 3 : 5-Oct-17

According to official figures, interest-only loans account for about 35 per cent of all mortgages issued in Australia. However, research by UBS has found that just 24 per cent of home loans are interest-only. Jonathan Mott of UBS says the discrepancy could be because many of these borrowers are unaware that they are not paying off the principal of their loan. The UBS survey also found that 70 per cent of people with interest-only loans reported having "moderate" or "high" levels of financial stress.

CORPORATES
UBS HOLDINGS PTY LTD

Mortgage stress up despite decline in rates

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Original article by Roy Morgan Research
Market Research Update – Page: Online : 29-Sep-17

A Roy Morgan Single Source survey has found that mortgage stress increased to 17.3% of Australian borrowers in July 2017, an increase of 0.3% points over the last 12 months, despite a decline in home loan interest rates. Over the last 12 months there has been an increase in mortgage stress for both those considered to be "At Risk" (which is based on the amount originally borrowed) and those "Extremely at Risk" (based on the amount currently outstanding). In the three months to July 2016, 17.0% of mortgage holders were "At Risk"; this has increased to 17.3% in July 2017. Over the same period the proportion that were "Extremely at Risk" increased from 12.4% to 12.8%. The main cause of the increase in mortgage stress was the fact that over the last year, the median household income of mortgage holders only increased by 2.0%, well behind the increase in the median amount borrowed (up 7.4%) and the median amount outstanding (up 13.1%).

CORPORATES
ROY MORGAN RESEARCH LIMITED

RBA keeping close eye on home owners

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Original article by Clancy Yeates
The Age – Page: 23 : 27-Sep-17

The Reserve Bank’s assistant governor for the financial system, Michele Bullock, says the central bank is closely monitoring the high levels of household debt. She has warned that mortgage borrowers who have capitalised on historically low interest rates would be especially vulnerable to any "economic shock". Bullock adds that consumer spending may be affected when interest rates begin to rise. She also notes that measures aimed at restricting growth in higher-risk mortgage lending have made the banking system less vulnerable to a financial shock.

CORPORATES
RESERVE BANK OF AUSTRALIA

Home loan arrears hit five-year high

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 4 : 19-Sep-17

The percentage of Australian mortgages on which a payment is more than 30 days overdue stood at 1.62 per cent in May 2017, according to Moody’s. This figure represents the highest level of mortgage arrears in five years, with arrear rates at record levels in South Australia, Western Australia and the Northern Territory. Arrear rates declined in both New South Wales and Victoria.

CORPORATES
MOODY’S INVESTORS SERVICE INCORPORATED, STANDARD AND POOR’S (AUSTRALIA) PTY LTD

Wealthy carrying big debt, says ABS

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Original article by Jacob Greber
The Australian Financial Review – Page: 9 : 14-Sep-17

The Australian Bureau of Statistics estimates that the proportion of households that are overindebted rose from 21 per cent in 2003-04 to 29 per cent in 2015-16. Chief economist Bruce Hockman says the mean household debt increased by 83 per cent in real terms over this period, while mean asset value and gross income rose by 49 per cent and by 38 per cent respectively. Hockman adds that 47 per cent of the nation’s wealthiest households that have an outstanding property loan are overindebted.

CORPORATES
AUSTRALIAN BUREAU OF STATISTICS