Digital Finance Analytics (DFA) Blog
"Intelligent Insight"
Using the RBA household ratios, we can look at the effect of debt on the average household. It blows up the myth of “household deleveraging”, much talked about after the GFC. Whilst the average data masks the differences between different household segments (see the segmented analysis in our survey and we know debt is becoming … Continue reading “Household Debt Burden Increases Again”
ASIC today released their review of activity in the Life Insurance Industry, and finds that consumers interests are not always given priority. The $44bn industry touches superannuation, annuities, and other elements, as shown in a diagram reproduced from the report. We have previously highlighted the issues around annuities. They found that high upfront commissions are … Continue reading “ASIC Says Life Insurance Industry Needs Higher Standards”
In the paper released by the Central Bank of Ireland, it is clear they have gone macroprudential! According to the Irish Times new rules will be applied to mortgage lenders in Ireland from 1 January 2015. A 2 month consultation period now starts, so they may get tweaked before implementation. The UK had announced parallel … Continue reading “Ireland Joins The Macroprudential Bandwagon”
The ABS today released their Distribution of Household Income, Consumption and Wealth data for the years from 2003 to 2012. According to the ABS, the average gross disposable income of Australian households grew 58 per cent in the period 2003-04 to 2011-12. However, the highest income quintile grew at a rate above average, at 62 … Continue reading “Household Income Trends Show Strongest Growth At The Top”
The RBA made a statement today to the Inquiry into Affordable Housing. Several points to note: 1. They recognise the high price to income ratio we currently have, but also state that low rates make larger mortgages affordable. the ratio of housing prices to incomes is at the top of its historical range; but over … Continue reading “RBA Highlights Housing Supply Issues And Lending Regulation”
I did an interview for the ABC, on the RBA Financial Stability Review. Here is the transcript, courtesy of the ABC. The link to the interview, and my longer interview can be found at the ABC site. By way of context, a quick reminder of current house price trends from the Economist: CHRIS UHLMANN: The … Continue reading “My Recent Thoughts On House Prices”
We have updated our mortgage stress models, to take account of the latest tranche of economic data, including falling real incomes, potential uplifts in capital requirements and inflation running hot, so creating the need to lift interest rates; and demand for property continuing to go ahead of supply. Our recent post the Anatomy of Mortgage … Continue reading “Mortgage Stress Coming To A Household Near You”
We have just received the latest findings from our Small and Medium Business surveys, which shows that many are still running hard to stand still and are unwilling or unable to borrow more. The sector is an important bell-weather for the broader economy, because nearly half of all Australian households are reliant in part or … Continue reading “SME’s Business Grinds On”
A cornerstone of banking regulation and control is the application of capital ratios, which acts a brake on their ability to write more loans. The rules are set by the Bank of International Settlement, but they may be interpreted by local regulators, like APRA in Australia to take account of local conditions. BIS has no … Continue reading “The Capital Conundrum”
Yesterday APRA published their quarterly ADI performance statistics to June 2014. So today we look at some of the detail contained in this mammoth release, with a focus on the four major banks, which makes up the bulk of the industry. APRA reported that the net profit after tax for all ADIs was $8.4 billion … Continue reading “Bank Profits Up To $8.4 Billion In June Quarter – APRA”