With the latest rises in rates of 3% flowing through to the markets, we look at the impact, now and ahead with Steve Mickenbecker from Canstar.
CONTENTS 0:00 Start 0:53 Housing Shortages and Stress 11:40 Interest Rates Moves 20:00 Fixed Rate Cliff Ahead 25:30 Credit Card Issuing Up 34:00 Refinancing Risks 40:30 Deposits 49:00 Financial Homework For The Holidays
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.
Given we now have mortgage rates 3% higher than at the start of the year – analysts are asking whether there are yet signs of mortgage portfolio risks in the banking system.
We certainly know that households cash flows are under pressure, from our own mortgage stress analysis, and Roy Morgan’s research on consumer confidence and their own mortgage stress analysis.
And we know that APRA’s 3% “Buffer” is being breached now, and it is even worse when they had set a 2% buffer earlier on.
But all that said, there is a lag between rate rises and delinquency – of months, if not years, so I would not be expecting much movement yet – that comes later. This also aligns with recent incoming data too.
For example, according to the latest Quarterly Statistics from APRA, the banks wrote fewer high loan-to-value ratio mortgages and decreased high debt-to-income lending over the September quarter, which the prudential regulator has welcomed.
They welcomed the fact that the banks have been “improving” the risk characteristics of their new residential mortgage lending, after finding that both high debt-to-income (DTI) and high LVR lending had reduced over the September quarter and suggested that the figures were largely promising given the strength of the banks’ profitability and liquidity positions as well as the reduction in “riskier” lending.
Today’s post is brought to you by Ribbon Property Consultants.
Digital Finance Analytics (DFA) Blog
Are There Signs Of Bank Mortgage Portfolio Stress Yet?
This is an edited and updated version of a show originally posted on “In The Interests Of The People”, with Economist John Adams and I discussing the current ASIC inquiry being run in the Senate.
There were some answers provided last week to questions on notice about ASIC’s conduct in terms of trying to lobby to stop the inquiry.
But in late breaking news, and not covered in the earlier show, further questions and answers were posted late last Friday evening (putting the trash out?) demonstrating just how unwilling the Corporate Regulator is in terms of disclosure. Is this contempt?
The earlier IOTP show, where we also discuss how Crypto plays into this, is available here. https://youtu.be/JPoOyV3Mvis
Go to the Walk The World Universe at https://walktheworld.com.au/
Another Friday canter through Tarric’s latest slides, as we look at the disconnect between monetary policy and real life. Is Australia somehow different?
Charts are here: https://avidcom.substack.com/p/charts-that-matter-25th-november?sd=pf
Go to the Walk The World Universe at https://walktheworld.com.au/
Digital Finance Analytics (DFA) Blog
The Busted Flush Is A Real Thing! With Tarric Brooker
This is an edited version of a live discussion about the current property market with Veronica Morgan from Good Deeds and The Elephant in the Room Podcast.
