Economics and Banking – Page 464 – Digital Finance Analytics (DFA) Blog

Nab’s Long Winding Road Home

Nab released full year results to September 2014 today. From the ASX announcement we see:

Cash earnings declined to $5.18 billion, which is 9.8% below the September 2013 full year due to earnings adjustments announced on 9 October 2014 relating to UK conduct provisions, capitalised software impairment, deferred tax asset provisions and R&D tax policy change totalling $1.5 billion after tax for the 30 September 2014 full year.

Excluding the impact of changes in foreign exchange rates, actual revenue declined 1.1%. After exchange rate adjustments, revenue increased by approximately 1.9% with higher lending balances, partly offset by a lower net interest margin (NIM) and weaker Markets and Treasury income.

Expenses rose 0.7 % excluding the impact of changes in foreign exchange rates and one-off adjustments. Adding in the impact of higher UK conduct provisions, capitalised software impairment and R&D tax policy change expenses rose 21%. Excluding these items and prior period UK conduct charges relating to PPI and IRHP, expenses rose 4.5% over the year.

Improved asset quality and deliberate portfolio choices made over recent years have resulted in a total charge to provide for bad and doubtful debts (B&DDs) for the year of $877 million, down 54.7% on 30 September 2013 due primarily to lower charges in Australian Banking and NAB UK CRE (Corporate Real Estate). The charge includes a $50 million release from the Group economic cycle adjustment and $99 million release from the NAB UK CRE overlay

The Group maintains a well diversified funding profile and has raised approximately $28.2 billion of term wholesale funding (including $7 billion secured funding) in the 2014 financial year. The weighted average term to maturity of the funds raised by the Group over the 2014 financial year was 5.1 years. The stable funding index was 90.4% at 30 September 2014, a 1.2 percentage point increase on 30 September 2013.

The Group’s Basel III Common Equity Tier 1 (CET1) ratio was 8.63 % as at 30 September 2014, an increase of 20 basis points from 30 September 2013 and broadly stable compared to 31 March 2014. As announced in the March 2014 half year results, the Group will target a CET1 ratio of 8.75% – 9.25% from 1 January 2016, based on current regulatory requirements.

The final dividend has been maintained at 99 cents, fully franked, and a dividend reinvestment plan (DRP) discount of 1.5% will be offered with no participation limit. NAB has entered into an agreement to have the DRP on the final dividend partially underwritten to an amount of $800 million over and above the expected participation in the DRP. Assuming a DRP participation rate of 35%, these initiatives will provide an expected increase in share capital of approximately $1.6 billion, which is equivalent to a 44 basis point increase in NAB’s CET1 ratio.

DFA believes the challenge for the bank is to get their Australian franchise to fire consistently, leveraging their footprint in home lending, business banking and wealth management. This will be a long and hard journey because it will be a question of excellence in execution, effective customer segmentation, and the removal of toxic customer servicing experiences, enabled by continued technology investment. We would also expect to see a continued withdrawal from the overseas ventures, which consistently underperformed. Overall, we believe NAB will become ever more reliant on the local Australian and New Zealand businesses, and that the long winding road of offshore investments will lead to further divestments. The truth is that the big four have a natural advantage in their home markets (high margins, benign competition and gentle regulation) and Australian banks find it very hard to perform consistently in the high-competition markets of the UK and USA. But Nab will have to work hard to break the cultural, process and systems barriers which beset the bank.

Finally, a release in provisions made a significant positive contribution this time around, but will not always be available.

Chart source ASX.

ASIC’s Annual Report Tabled

ASIC’s annual report for the 2013–14 financial year was tabled on Wednesday 29 October 2014 in the Australian Parliament. Its 185 pages highlights the broad range of issues ASIC covers, and connects back to their earlier strategy release. DFA found some interesting nuggets of information in the 6 year trends table.

There has been a steady rise in the number of companies in Australia, with over 2.1 million operating. Last year more than 212,000 new companies were registered, whilst about 85,000 closed.

There was a steady rise in the number of Australian Financial Services Licenses issued, including a number of limited licenses to Accountants enabling them to offer financial advice. On the other hand, the number of registered Managed Investment Schemes (MIS) fell, explained partly by the collapse of agribusiness schemes such as Timbercorp and Great Southern.

Finally, we note that the number of registered Auditors fell a little, now below 5,000 (despite the rise in companies), as there has been considerable consolidation in the audit sector; whilst the number of entities registered as Liquidators rose slightly.

Managing Global Finance As A System

Andrew Haldane, Chief Economist of the Bank of England, gave the annual Maxwell Fry lecture on Global Finance at Birmingham University. There are some powerful observations here, relevant to the Australian context, as well as the potential to amplify risks associated with a more interconnected world. He also takes macroprudential discussions further.

Andrew’s main theme was the growing size and complexity of global capital flows between countries. He noted that ‘cross-border stocks of capital are almost certainly larger than at any time in human history’. And the apparent independence of domestic investment from domestic saving suggests that ‘measured levels of global capital market integration … remain at higher levels than at any point in history’. He discussed how this can be ‘double-edged’ from a financial stability perspective: it both shares risk (which can be stabilising) but also spreads and amplifies risk (which can be destabilising) – potentially generating ‘more frequent and/or larger dislocations’.

He argued that many lessons have been learned from the financial crisis, not least the need to ‘safeguard against systemic risk’. Yet when it comes to the fortunes of the international monetary system ‘it is far from clear that these lessons have been learned, much less that the international rules of the road have been reformed’. ‘Arguably, the rules of the road for this system have failed to keep pace with the growing scale and complexity of global financial flows’.

One of the consequences of the growth in cross border capital flows is ‘the steady rise in the degree of co-movement in asset prices over time’. Cross-border spillovers are becoming more important and global common factors more potent. A particular example is the behaviour of yield curves across countries. ‘To a first approximation, global yield curves appear these days to be dancing to a common tune’.

Andrew identified four areas where the global financial system could be strengthened:

a) Improve global financial surveillance, by tilting IMF surveillance away from monitoring individual country risk and towards multilateral surveillance and having more real-time tracking of the global flow of funds.

b) Improve country debt structures, for example by encouraging countries to issue GDP linked bonds, or Contingent Convertible (CoCo) bonds.

c) Enhance macro-prudential and capital flow management policies. For example, he suggests that ‘total credit follows a global cycle that has strengthened over time’ in which case ‘there may in future be a case for national macro-prudential policies leaning explicitly against these global factors’ taking international macro-prudential policy co-ordination ‘to the next level’. This next phase of macro-prudential policy may see measures ‘targeted at particular markets, as well as particular countries’.

d) Improve international liquidity assistance, for example by increasing the resources available to the IMF.

FED Ends Bond By-Back Programme

Just released. Sufficient signs of recovery mean the FED will end QE this month. Interest rates will remain low for now. One of the biggest economic experiments in history moves to a new phase.

Information received since the Federal Open Market Committee met in September suggests that economic activity is expanding at a moderate pace. Labor market conditions improved somewhat further, with solid job gains and a lower unemployment rate. On balance, a range of labor market indicators suggests that underutilization of labor resources is gradually diminishing. Household spending is rising moderately and business fixed investment is advancing, while the recovery in the housing sector remains slow. Inflation has continued to run below the Committee’s longer-run objective. Market-based measures of inflation compensation have declined somewhat; survey-based measures of longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators and inflation moving toward levels the Committee judges consistent with its dual mandate. The Committee sees the risks to the outlook for economic activity and the labor market as nearly balanced. Although inflation in the near term will likely be held down by lower energy prices and other factors, the Committee judges that the likelihood of inflation running persistently below 2 percent has diminished somewhat since early this year.

The Committee judges that there has been a substantial improvement in the outlook for the labor market since the inception of its current asset purchase program. Moreover, the Committee continues to see sufficient underlying strength in the broader economy to support ongoing progress toward maximum employment in a context of price stability. Accordingly, the Committee decided to conclude its asset purchase program this month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress–both realized and expected–toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. The Committee anticipates, based on its current assessment, that it likely will be appropriate to maintain the 0 to 1/4 percent target range for the federal funds rate for a considerable time following the end of its asset purchase program this month, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored. However, if incoming information indicates faster progress toward the Committee’s employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated. Conversely, if progress proves slower than expected, then increases in the target range are likely to occur later than currently anticipated.

When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Stanley Fischer; Richard W. Fisher; Loretta J. Mester; Charles I. Plosser; Jerome H. Powell; and Daniel K. Tarullo. Voting against the action was Narayana Kocherlakota, who believed that, in light of continued sluggishness in the inflation outlook and the recent slide in market-based measures of longer-term inflation expectations, the Committee should commit to keeping the current target range for the federal funds rate at least until the one-to-two-year ahead inflation outlook has returned to 2 percent and should continue the asset purchase program at its current level.

Moodys Warns About The Rise In Interest Only Loans

Moodys today published commentary on the risks attached to the rising number of interest only loans.

An increase in the number of Australian “owner-occupier” home buyers who are taking out interest-only (IO) mortgages is credit negative for future Australian Residential Mortgage Backed Securities (RMBS) because such loans have a higher risk of delinquency and default, particularly if interest rates rise from their current record low levels.

Over the past year, a notable rise has occurred in the amount of IO loans in Australia and owner-occupiers – people who buy a home to live in, as opposed to investors who buy to rent out — are accounting for a growing share of these loans.

IO loans are common among real estate investors in Australia because interest costs on investment loans can be claimed as a tax deduction. However, owner-occupiers cannot claim such deductions. There are concerns that many of the owner-occupiers taking out these loans — which are generally larger than the traditional Principal and Interest (PI) loans — would consequently find it difficult to service them if interest rates start to rise.

Greater Delinquency Risk as Owner-Occupier Interest Only Loans Grow

IO loans accounted for 43.2% of all new mortgages in June 2014, up from 38.6% in June 2013, according to the latest Australian Prudential Regulation Authority figures. Over the same period, the proportion of loans for investment properties also rose — to 37.9%, from 35.2% — but not by as much as the rise in IO loans.

The growing gap between the percentage of IO loans and investment loans shows that more owner-occupier borrowers are taking out IO loans.

IO loans, whether they are for owner-occupiers or real estate investors, generally carry a greater risk of delinquencies and default than traditional PI loans.

In particular, IO loans are more sensitive to interest rate rises than PI loans because of their larger amounts and slower amortization rates. IO loans are most sensitive to higher interest rates when they revert to PI loans — which typically occurs after 5-10 years — and monthly repayment amounts rise significantly.

If the proportion of owner-occupier IO loans continues to rise, we would expect that they would also make up a greater proportion of the loans in future RMBS transactions, which would be credit negative, given their higher propensity for delinquency and default.

Owner-occupier IO loans account for 16.5% of the current RMBS portfolio, but these do not present the same risk as new owner-occupier IO loans because they were underwritten when interest rates were higher and would be more resilient when rates rise again.

In the current record low interest rate environment in Australia, delinquency rates for IO loans have in fact been lower than for PI loans. This situation reflects the fact that monthly repayments for IO loans are lower than PI loans. However, our expectation is that interest rates in Australia will rise in 2015, putting more pressure on IO borrowers and resulting in greater levels of delinquencies and defaults.

Real estate investors in Australia can claim a tax deduction for the interest costs of their loans, which will help offset the impact of higher rates. However, owner-occupiers are not eligible for such deductions. For this reason, all else being equal, an increase in interest rates will be more severe for owner-occupier IO borrowers than investment borrowers.

Owner-Occupiers Turn to IO Loans as Property Prices Increase

At a time when property prices and therefore the size of mortgages in Australia is rising rapidly, the increase in the number of owner occupiers taking out IO loans may reflect their decision to take out larger loans amounts, given the rise in property prices.

In Australia, national house prices have increased by 9.3% over the year ended September 2014, while in Sydney, the city with the highest growth, prices have risen by 14.3%.

Against this backdrop, home buyers may view IO loans as an option if they seek to borrow larger amounts without having to service as large a monthly repayment amount as they would have to with a similarly sized PI loan.

In our existing RMBS portfolio, the average loan size of owner-occupier IO loans is AUD289,800, compared with AUD187,500 for PI loans.

In addition, the current loan-to-value ratio of owner-occupier IO loans is 2.1% higher than PI loans. IO loans are also paid off at a slower rate, as reflected by the fact that they are 5.1% in advance of their scheduled payment balance, compared with 6.5% for PI loans. Hence, owner occupier IO loans are larger, more leveraged and slower to amortize than PI loans.

Accordingly, once interest rates rise from their current record low levels, any issues owner-occupier IO loan borrowers have with servicing their mortgages will be exacerbated, leading to higher delinquencies and defaults.

However, it is also important to note that some owner-occupier borrowers may be choosing IO loans simply to maintain a level of flexibility in managing their repayment obligations, rather than because of serviceability reasons. Given that interest rates are at record lows, these borrowers may feel comfortable in paying only the interest on their mortgages and using any remaining available funds for other purposes.

But, because these borrowers are making few, if any, principal repayments, their loan amounts will remain high relative to PI loans, leaving them more susceptible to payment shocks when interest rates rise.

ABC Covers Macroprudential

The ABC The Business last night covered the property market, “The RBA’s Property Problem” – including comments from the RBA and APRA. Industry analysts also make the point that the tax incentives for investment property will work again the intention of macroprudential – we discussed negative gearing yesterday.

A Perspective On Negative Gearing

There is no doubt that negative gearing is a hot issue. As the ASIC Money Smart web site says:

Negative gearing is when your income from an investment is less than your expenses. In the case of property this means the rental income you receive is less than the interest and other expenses you pay. Your investment is making a loss which most investors hope they will make up with a capital gain when the value of the property increases. A loss can be used to reduce your taxable income which will reduce the amount of tax you pay. See the Australian Taxation Office’s section on residential rental properties for details of income you must declare and expenses you can claim. Remember, you are only reducing your tax payable because the income from your investment isn’t covering your expenses.

In the year to 2012, the ATO reported that whilst income from rental properties reached $33bn, the total tax offsets including interest costs were $49.6bn, leaving a net loss to the tax payer of $8bn. So, negative gearing costs. The chart below shows the trend for recent years. Well over 1.2 million households gear into property, and two in three reported a loss (to offset income elsewhere). The RBA’s Financial Stability Report, illustrated that the top fifth of income earners hold around 60 per cent of investment housing debt.

Now, many argue that negative gearing is essential to support house building and the rental sector, and should not be touched. However, the data tells a different story. We went back to our household surveys, to examine the penetration of gearing. First, we looked at those borrowing for owner occupation, versus for investment purposes. No surprise that more were property investors. However some owner occupied households also geared their property into, for example stock market investments. Recently, the growth in investment gearing has been much stronger. We already know this is being driven by expectations of future capital growth, as reported in our earlier posts.

Then we looked at the type of property geared. We found that whilst a proportion were geared into new property, most were gearing into existing property, for rent.

No surprise, given the growth in loans for investment purposes, and only a small proportion go towards new builds.

So, we conclude that gearing has more to do with stoking prices in the established market than directly stimulating new building. Rents are set as a combination of the costs of a property, and income levels. If prices were more realistic, rents would be lower, because loans would be lower. More rentals loose money than make money today, and the only saving grace in the minds of investors is hoped for future capital growth.

A more logical approach would be to focus, from this point forward negative gearing on new builds only, thus helping to boost supply and stabilise prices. Appropriate transition arrangements for existing gearing would be needed, but the current arrangements are not fair, and will become an even greater drain on government coffers if interest rates (and net rental losses) rise.

ASIC Crackdown on Payday Lenders

ASIC just announced they have forced a number of payday lenders to stop offering “leaseback” arrangements to consumers who want a payday loan.

ASIC was concerned that the Cash Loan Money Centres and Sunshine Loans were using business models which deliberately attempt to avoid the protections for consumers contained in the small amount lending provisions in the National Consumer Credit Protection Act 2009 (National Credit Act).

Consumers who approached a Cash Loan Money Centre for a payday loan were signed up to an arrangement where the consumer ‘sold’ a household item such as a washing machine or fridge to the business, in return for a sum of money, and simultaneously ‘leased’ the goods back from the business. In practice, the goods never changed hands, and the business never actually saw the household goods, or confirmed the current market value before ‘purchasing’ them from the consumer.

Similarly, under the model used by Sunshine Loans, a consumer would approach the business for a payday loan, and enter into an agreement to assign the rights to use their mobile phone or car to the lender for a fee, and then simultaneously lease the rights back.

ASIC was primarily concerned that, in both cases, consumers were charged considerably more than the amount allowed under the legislative cap on costs for payday loans. In one example, a consumer received $1,000 and repaid a total of $1,682.10, when the statutory maximum the consumer would have repaid for a small amount loan of the same amount was $1,280.

Deputy Chairman Peter Kell said, ‘Where we see business models or arrangements being used which are designed to avoid obligations imposed by the consumer credit legislation, we will take action’.

‘Payday lenders and their advisers need to ensure any change to their lending models are legitimate and do not seek to avoid the small amount lending provisions’, Mr Kell said.

After ASIC intervention, Cash Loan Money Centres and Sunshine Loans have ceased using these models and are now offering consumers a small amount credit contract.

Before July 2013, some states and territories had laws capping the cost of credit for small amount loans. These laws were replaced by the national cap which was introduced in July last year and is regulated by ASIC.

A small amount loan, in general terms, is a loan where the amount borrowed is $2,000 or less and the term is between 16 days and one year. From 1 July 2013, only the following fees can be charged on small amount loans:

a monthly fee of 4% of the amount lent

an establishment fee of 20% of the amount lent

Government fees or charges

enforcement expenses, and

default fees (the lender cannot recover more than 200% of the amount lent).

Providers of small amount loans are also subject to enhanced responsible lending obligations, including providing a warning statement to the consumer which contains information about the alternatives to a payday loan.

Payday lending attracts households who are less able to access other forms of credit, and are likely to end up paying very high effective rates on small values lent.

APRA Hoses Down Macroprudential

The Australian Prudential Regulation Authority (APRA) has published the opening statement given to the Senate Standing Committee on Economics by Wayne Byres today. He appears to deflect focus from macro prudential intervention.

Recent comments in the Reserve Bank’s Financial Stability Review about emerging imbalances within the housing market, and the need to reinforce sound lending practices, has been interpreted in many instances as Australia being on the verge of macroprudential interventions of the type that have been instituted in a number of other jurisdictions around the world, such as hard limits on certain types of loans, or minimum deposit requirements for borrowers. While we are very much still in the investigation stage, and have not yet decided what further action we might need to take, I would like to make two points in response to the general commentary currently taking place:

First, within our regulatory framework APRA generally seeks to avoid outright prohibitions on activities where possible: instead, our regulatory philosophy is to focus on institutions’ setting their own appetite for risk. We also use the regulatory capital framework to create incentives for prudent lending and ensure that, while institutions remain free to decide their lending parameters, those undertaking higher risk activities do so with commensurately higher capital requirements. That is not to say that we would never use the sorts of tools being employed elsewhere, but they are unlikely to be the first ones we reach for.

That brings me to my second point responding to potential risks in the housing market in this way is not new. We see it as standard supervision. In the period from 2002 to 2004, for example, there was a similarly strong run-up in house prices, and similar concerns about higher risk lending and emerging imbalances. We’re doing now what we did then: collecting additional information, counselling the more aggressive lenders, and seeking assurances from Boards of our lenders that they are actively monitoring lending standards. We’re about to finalise guidance on what we see as sound mortgage lending practice, and we’ve conducted a comprehensive stress test of the largest lenders. The sources of risk are different this time around – last time we were focussed on low doc and no doc lending – but the response of higher supervisory intensity and regulatory requirements in the face of higher risk activity is not new. It is APRA doing its job.

We have already highlighted the potential to adjust capital risk weightings as a mechanism to control risk, and it may be that the upcoming G20 will decide on lifting capital weights. However, we believe there is a role for targetted macroprudential measures in the investment housing sector as the argument is not just about risk per se, rather it is the fact that in the current low rate environment too much lending is going into unproductive establishing housing investment, rather than lending for productive growth. This point was well made in the speech yesterday by Philip Lowe, RBA Deputy Governor in an address to the Commonwealth Bank of Australia’s 7th Annual Australasian Fixed Income Conference in Sydney – Investing in a Low Interest Rate World. He concluded:

Very low global interest rates have been with us for some time. And it is likely that they will stay with us for some time yet.

Fundamentally, this reflects the low appetite for real investment relative to the appetite for saving.

These low rates are encouraging investors to buy existing assets as they seek alternatives to bank deposits earning very low or zero rates. Asset prices have increased in response.

Some of this is, of course, desirable and, indeed, intended. But the longer it runs on without a pickup in the appetite for real investment, the greater is the potential for new risks to develop. During this period, while we wait for the investment environment to improve, we need to be cognisant of potential risks of asset prices running too far ahead of real activity. This is true in Australia, as it is elsewhere around the world.

The underlying solution is for an improvement in the investment climate. Monetary policy can, and is, playing an important role here. But ultimately, monetary policy cannot drive the higher ongoing expected returns on capital that are required for sustained economic growth and for reasonable long-term returns to savers. It is instead government policy – including in some countries, increased spending on infrastructure – that has perhaps the more important role to play here.

RBA Still On The Low Rate Trip

The RBA minutes of the 7th October meeting are out. The themes are familiar, and they continue to signal an ongoing period of low interest rates, and the importance of lending standards.

Growth in the global economy was continuing at a moderate pace. Commodity prices, in particular iron ore prices, had declined over the past month. This was consistent with both the ongoing increase in iron ore supply and further weakening of the Chinese property market, which is an important source of demand for steel. Global financial conditions remained very accommodative and the Australian dollar had depreciated somewhat, largely reflecting a broad-based appreciation of the US dollar.

As expected, the domestic economy had grown moderately in the June quarter, following a strong March quarter result. The outcome was supported by strong growth in dwelling investment and steady consumption growth. Members noted that more timely indicators suggested that moderate growth overall had continued into the September quarter.

Faced with volatility in the labour force survey results, members based their assessment of the labour market on a range of indicators. These suggested that conditions in the labour market remained subdued but had stabilised somewhat this year. While forward-looking indicators pointed to modest employment growth in the months ahead, there was a degree of spare capacity in the labour market and it would probably be some time before the unemployment rate declined consistently. Wage growth was expected to remain relatively slow in the near term, which should help to maintain inflation consistent with the target even with lower levels of the exchange rate.

Members noted that the current setting of monetary policy was accommodative, with lending rates remaining very low and continuing to edge lower over recent months as competition to lend had increased. In this context, members discussed the importance of lenders maintaining strong lending standards and the ongoing dialogue between the Bank and APRA on the matter.

Continued accommodative monetary policy was expected to support demand and help growth to strengthen over time. To date, this had been most apparent in the housing market, where dwelling investment had picked up and was expected to remain strong following the rapid rise in housing prices and high levels of approvals. Credit growth had remained moderate overall, but in recent months there had been a further pick-up in lending to investors in housing. Despite the easing in financial conditions associated with the depreciation of the Australian dollar, the exchange rate remained high by historical standards – particularly given recent declines in key commodity prices – and was offering less assistance than would normally be expected in achieving balanced growth in the economy.

Given the information available, the Board’s judgement was that the current stance of monetary policy continued to be appropriate for fostering sustainable growth in demand and inflation outcomes consistent with the target over the period ahead. Members considered that the most prudent course was likely to be a period of stability in interest rates.

Looks like rates will remain on hold for a few months more yet, and macroprudential controls on investment lending appear likely.