Category: Banking Stats

Home Lending Booms: But What Have They Got To Hide?

The ABS released their monthly lending indicators for September today, and it showed a strong uptick in new mortgage loans, in contrast to poor household spending trends and confidence overall, though as we will see there are questions about this dataset too. Significantly, we also note the ABS is about to terminate its monthly reporting of new loans data, saying the monthly Lending Indicators publication will transition to a quarterly release.

My observation is different because the monitoring of new loans for housing is an essential barometer for the economy, without the monthly data it will be easier for lenders to continue their push to reduce lending standards (something evidently being supported by the opposition party) and so drive home prices even higher.

So credit for home lending, especially investors is booming. Worth recalling here the RBA’s recent warning that falling interest rates could trigger a property price boom that encourages households to take on too much debt.

As you know my surveys highlight some households are under extreme financial pressure, and I will be discussing this in my live show next Tuesday, so official data on household spending, is also an important indicator. So conveniently, the ABS also released household spending data for August today. However, I have issues with these figures too as this data excludes, Rent and other dwelling services, Electricity, gas and other fuels, Communication Services, Education Services and Insurance and other financial services. IN other words, the spending data is partial and incomplete, and excludes more than half of a typical mortgaged or renting household.

So all up, the spending indicators are not really meaningful, yet the ABS will be enhancing the Monthly Household Spending Indicator and ceasing the Retail Trade publication after the June 2025 reference period. On the other hand, the data on lending will be only released four times a year.

This is another example of data not fit for purpose, and I assume the financial pressure the ABS is under. But it does beg the question. What have they got to hide – and who is pulling their strings?

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DFA Live Q&A HD Replay: Steve Keen: Why Real World Economics Matters!

This is an edited version of live discussion, with Professor Steve Keen.

Steve Keen is an Australian economist and author, highly critical of neoclassical economics as inconsistent, unscientific, and empirically unsupported. Mainstream economist have in effect damaged society and the planet because of what they don’t know!. There are better ways to think about what’s going on. His latest book The New Economics.

https://profstevekeen.substack.com

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Are We Being Lied To?

The currently running Senate inquiry into bank branch closures has flushed out that while banks are claiming they are following their customers into a digital future, actually, they ae rather setting that agenda, removing ATMS and Branches and forcing people to go digital, whether they want to or not.

And some banks have all but admitted they are fudging the figures, to buttress their strategy, never mind the impact on real customers.

While politicians are keen to step back from the argument on the basis banks are commercial entities and should be able to make what ever strategic decisions they want, the truth is banks are a government protected species, who have received massive financial support from us tax-payers via the Term Funding Facility and other measures.

And to reinforce the argument that we are being lied to, according to a news.com.au exclusive article, a former ANZ employee has alleged that the bank is forcing customers out of branches and then using their absence to justify branch closures.

https://www.news.com.au/finance/business/banking/whistleblower-alleges-anz-is-deliberately-pushing-customers-out-of-branches/news-story/8e359187d61ca1ad77552db45fc47168

Phillip, a pseudonym told news.com.au that during the time he worked at an ANZ branch in a metropolitan area, staff were directed not to serve customers who came to the branch.

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APRA Hopeless On Branch Closures…

Journalist Dale Webster over at The Regional has rightly launched an attack on APRA, the banking regulator.

https://www.theregional.com.au/post/apra-bogged-in-a-data-mess-of-its-own-making

They released their annual points of presence data that showed an 11 per cent fall in bank branches nationally in 12 months. It triggered HEADLINES around Australia last week screamed out about bank closures. Channel Nine was one of many media outlets that picked up the story, reporting 424 branches had “shut their doors for the final time”.

As Dale writes, the problem is APRA never actually said that.

“The latest statistics show a further decline in bank branches in the year to 30 June 2023, with a reduction of 424 branches across Australia (11 per cent), including 122 branches (7 per cent) in regional and remote areas. This continues a trend that has seen branch numbers decline by 34 per cent in regional and remote areas, and 37 per cent overall, since the end of June 2017.”

What unsuspecting media did not pick up on was that among those 424 branches were a number of sites that had been stripped of branch status because they no longer provided the level of service required to be classified as such by law.

The doors are still very much open but they are among the growing number of banks that have no tellers and customers can only get cash from an ATM.

So we are left with what could be described as a bit of a situation, according to Dale. I think it is more deliberate, as APRA again manages to hide the real story – on this they have form, given their close alignment to the Banks. They are in my view hardly independent, nor an effective regulator.

Will The RBA Blink First?

On Melbourne Cup day we will get the next RBA cash rate decision. Michelle Bullocks testimony before the Senate this week was pretty vague – waiting for data, will update forecasts etc.

But as Christopher Joye writes in the AFR, following the material upside surprise to inflation in the September quarter, almost all economists and investors agree that the Reserve Bank of Australia should lift interest rates in November.

But participants worry that a concerted campaign to politically compromise Australia’s central bank may result in the RBA remarkably choosing not to seek to combat its existential inflation crisis.

This would be the latest in a chapter of accidents, with the RBA cutting rates too low, and stoking the economy via the Term Funding Facility, and Quantitative Easing. Their yield control attempts went wrong, and then they held rates way to low, promising no hike for years. And their forecasting is a disaster.

This is a central bank with a 4.1 per cent cash rate that is just a smidge above what it assesses to be the neutral rate of 3.8 per cent. And that is a cash rate that is 1.0 to 1.5 percentage points below peer rates in the US, Britain, Canada and New Zealand.

Even the RBA’s outgoing assistant governor Luci Ellis, who is now chief economist at Westpac, called a “hike” only days after she predicted that inflation would not be robust enough to warrant one.

In sum, we know the RBA should hike in November. Whether it actually does or not appears to now be a question of its ability to resist political interference.

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Well, The RBA Does It Again… With Steve Mickenbecker

I caught up with Steve again following the RBA no change announcement on Tuesday, and we discussed the implications, in the light of new research from Canstar about the state of play of household finances.

Steve Mickenbecker is in Canstar’s Group Executive Team, bringing more than 30 years of experience in the Australian financial services industry. As a financial commentator for Canstar, Steve enjoys sharing his expertise across topics such as home loans, superannuation, insurance, mortgages, banking, credit cards, investment, budgeting, money management and more.

https://www.canstar.com.au/team-members/steve-mickenbecker/

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Finally, APRA Gets The Message!

Concurrent with the current Regional Branch Inquiry, APRA has announced a review of its Points Of Presence Data. This is welcome, because the current data contains many inaccuracies, and we need good data to ensure adequate transparency in terms of access to banking services.

https://www.apra.gov.au/discussion-paper-adi-points-of-presence-review

You can make a submission to this review.

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Signs That US Credit Growth Is Turning To The Deep Freeze

A recent survey of Texas bankers provides a significant indication of the potential economic slow-down which is underway in the USA. While it is possible Texas may be an outlier, it does chime with other recent data, as household savings balances are being substituted for personal credit, lending standards are being tightened, and commercial credit is throttled back. Combined this is another significant indicator of a potential recession ahead.

Talking About Bank Branch Closures On The Radio…

Bank Branch closures were discussed on ABC Illawarra this morning – and I was able to discuss the policy and practical issues surrounding this important issue in my interview.

It also led the local headlines this morning.

Link to Senate Inquiry: https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Rural_and_Regional_Affairs_and_Transport/BankClosures

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Regional Communities Are Being Impoverished By Bank Closures!

More from Dale Webster of The Regional on the important issue of bank branch closures. She calls out the political inaction so far, including from our Treasurer and Finance Minister, who wins “porky of the year!”

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