Greedy banks protect profits: ACCC

Original article by Cliona O’Dowd, David Ross
The Australian – Page: 15 : 28-Apr-20

The Australian Competition & Consumer Commission has released the interim report of its Home Loan Price Inquiry. It has concluded that the nation’s four major banks failed to pass on the full 75 basis point reduction in the cash rate during 2019 in order to protect their profits. The ACCC also found that existing home loan customers tend to pay higher interest rates than new borrowers. Steve Mickenbecker of Canstar says it is a ‘lethargy tax’ rather than a ‘loyalty tax’, and the onus should be on existing customers to actively request a lower interest rate.

CORPORATES
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION, CANSTAR PTY LTD

Non-banks clamp down on new loans

Original article by Joyce Moullakis
The Australian – Page: 13 & 14 : 6-Apr-20

Non-bank lender Pepper Australia has increased its home loan interest rates and tightened its credit criteria as it assesses the impact of the coronavirus on its operations. Pepper will stop offering construction loans and will require a bigger deposit for commercial loans, while larger deposits will also be needed for its two types of home loans. Fellow non-bank lender Bluestone has also introduced new credit criteria as well as increasing the rates on all of its loan products by 35 basis points.

CORPORATES
PEPPER AUSTRALIA PTY LTD, BLUESTONE GROUP PTY LTD

Analysts cut bank earnings forecasts

Original article by Gerard Cockburn, Joyce Moullakis
The Australian – Page: 21 : 5-Mar-20

JP Morgan expects the net profits of Australia’s major banks to fall by 3-4 per cent over coming years after they moved to reduce their mortgage interest rates by 25 basis points, in line with the latest official interest rate cut. JP Morgan adds that the prospect of lower profit margins may prompt banks to reduce their dividend payouts. Macquarie has reiterated its ‘underweight’ recommendation on the banking sector, while UBS has downgraded its earnings-per-share forecast for bank stocks.

CORPORATES
JP MORGAN AUSTRALIA LIMITED, MACQUARIE GROUP LIMITED – ASX MQG, UBS HOLDINGS PTY LTD

Home loans lift on property recovery

Original article by Cliona O’Dowd
The Australian – Page: 20 : 17-Feb-20

A report from Deloitte notes that there was a seven per cent decline in new mortgage settlements in 2019. However, the latest edition of its Australian Mortgage Report shows that lenders and brokers expect a 2-3 per cent increase in mortgage settlements in 2020. Heather Baister of Deloitte says mid-tier lenders such as Macquarie and Citibank could benefit the most from the expected upturn in settlements.

CORPORATES
DELOITTE TOUCHE TOHMATSU LIMITED, MACQUARIE GROUP LIMITED – ASX MQG, CITIBANK PTY LTD

Housing boom to lift economy

Original article by Patrick Commins
The Australian – Page: 1 & 7 : 12-Feb-20

Data from the Australian Bureau of Statistics shows that there was 4.4 per cent growth in new home loan approvals in December. This was the biggest monthly increase since September 2016, and well above economists’ expectations of 1.6 per cent growth. Mortgage approvals increased by 14 per cent year-on-year. Factors such as the three official interest rate cuts in 2019 and a relaxation of lending restrictions in April have contributed to increased demand for home loans, with owner-occupiers accounting for much of the growth.

CORPORATES
AUSTRALIAN BUREAU OF STATISTICS

High prices foiling first-home buyers

Original article by Patrick Commins
The Australian – Page: 4 : 17-Jan-20

The number of first-home buyers approved for new loans in November fell by 0.9 per cent, according to the Australian Bureau of Statistics, while the average loan for first-home buyers increased to a record $410,000. ANZ economist Adelaide Timbrell says fewer first-home buyers taking out bigger loans is an indication that rising house prices are making it harder for first-home buyers to get into the property market. She says the ANZ expects an interest rate cut in February, which is likely to push up house prices and reduce housing affordability.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ,{SPAC}AUSTRALIAN BUREAU OF STATISTICS

One in five households facing mortgage stress

Original article by Duncan Hughes
The Australian Financial Review – Page: 3 : 3-Jan-20

Around two million households are finding it hard to make mortgage repayments despite low interest rates, according to comparison website Finder. The number of households in this position has risen since May 2018, the month before the Reserve Bank made the first of its three cash rate cuts. Brendan Coates from the Grattan Institute notes that borrowers should be looking around more for better mortgage rate offers, while Kate Browne from Finder comments that "mortgages need constant monitoring"

CORPORATES
FINDER.COM.AU, GRATTAN INSTITUTE, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

Economy fear with credit in the doldrums

Original article by David Rogers, Michael Roddan
The Australian – Page: 13 & 17 : 24-Dec-19

Data from the Reserve Bank of Australia shows that lending to businesses and property buyers increased by 0.1 per cent in November and 2.3 per cent in the year to November. This is the lowest rate of growth in private sector credit since April 2010. The figures also show that growth in home loans was 0.2 per cent in November and 2.9 per cent year-on-year, while non-housing credit fell by 0.5 per cent in November and 4.9 per cent year-on-year.

CORPORATES
RESERVE BANK OF AUSTRALIA, COUNCIL OF FINANCIAL REGULATORS, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, CORELOGIC AUSTRALIA PTY LTD

Reserve finds silver lining in household debt cloud

Original article by Cliona O’Dowd
The Australian – Page: 27 : 15-Nov-19

Australia’s household debt-to-income ratio is now about 190 per cent, compared with around 70 per cent in the early 1990s. However, the Reserve Bank’s assistant governor Michele Bullock notes that households that are in the top 40 per cent of income distribution account for three quarters of household debt. Bullock adds that while there has also been an increase in mortgage loan arrears, it is largely confined to several states. She also says negative housing equity is generally not a major concern unless somebody becomes unemployed and must sell their home.

CORPORATES
RESERVE BANK OF AUSTRALIA

First home buyer risk riles banks

Original article by John Kehoe
The Australian Financial Review – Page: 1 & 8 : 11-Nov-19

Major banks are doubtful that the federal government’s scheme to assist first-home buyers will start on its proposed date of 1 January. The scheme, announced during the final days of the May election campaign, will see the government provide up to 10,000 first-home buyers each year with free lenders’ mortgage insurance for people with deposits of as little as five per cent and less than 20 per cent. The big banks want the ability to charge higher interest rates for participants in the scheme, claiming that they will be a greater risk because of the low deposits involved.

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