Digital Finance Analytics (DFA) Blog
"Intelligent Insight"
The latest data to end November 2022 from the RBA and APRA shows that the rate of credit growth is slowing – presumably due to higher rates and reduced borrowing power. That said refinancing including equity draw-down is on the rise…
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Stock markets are down, superannuation funds diminished, and property prices sliding as Chris Joye’s Latest missive shows. So, the answer to my question is probably no, unless you are a politician still receiving a generous pay rise, or a high-flying executive or you are working in high demand areas like information technology or finance, or perhaps construction. And those in the public sector are most likely to be saying no even louder.
The Australian Institute in November said that Australian workers are about to have twelve years of real wages growth wiped out in 3 years as the The Reserve Bank’s November Statement on Monetary Policy revealed just how badly Australian workers are being hit by the current weak growth in wages and fast rising inflation.
In August the Reserve Bank was anticipating that wages in the 12 months to December this year would rise at 3.0%. This has now been increased to 3.1%. That would suggest a better situation for workers, but unfortunately, the RBA has increased its estimate for inflation for the same period from the 7.8% it had in August to now 8.0%. That represents a real wage fall of 4.54% compared to its estimate in August of 4.45%.
All up the new estimates out to the end of 2024 suggest that real wages by December 2024 will be 2.2% lower than they were in June this year. That is again worse than the 1.8% fall estimated in August.
But comparing real wages from June this year misses out on the massive falls that have already occurred. By the end of 2024 the Reserve Bank now estimates that real wages will be some 5.4% below where they were in March 2020 just before the pandemic occurred.
It means that at the end of 2023 workers will on average only be able to buy the same amount of items and services with their wage as they were 15 years earlier in December 2008.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Stock markets are down, superannuation funds diminished, and property prices sliding as Chris Joye’s Latest missive shows. So, the answer to my question is probably no, unless you are a politician still receiving a generous pay rise, or a high-flying executive or you are working in high demand areas like information technology or finance, or perhaps construction. And those in the public sector are most likely to be saying no even louder.
The Australian Institute in November said that Australian workers are about to have twelve years of real wages growth wiped out in 3 years as the The Reserve Bank’s November Statement on Monetary Policy revealed just how badly Australian workers are being hit by the current weak growth in wages and fast rising inflation.
In August the Reserve Bank was anticipating that wages in the 12 months to December this year would rise at 3.0%. This has now been increased to 3.1%. That would suggest a better situation for workers, but unfortunately, the RBA has increased its estimate for inflation for the same period from the 7.8% it had in August to now 8.0%. That represents a real wage fall of 4.54% compared to its estimate in August of 4.45%.
All up the new estimates out to the end of 2024 suggest that real wages by December 2024 will be 2.2% lower than they were in June this year. That is again worse than the 1.8% fall estimated in August.
But comparing real wages from June this year misses out on the massive falls that have already occurred. By the end of 2024 the Reserve Bank now estimates that real wages will be some 5.4% below where they were in March 2020 just before the pandemic occurred.
It means that at the end of 2023 workers will on average only be able to buy the same amount of items and services with their wage as they were 15 years earlier in December 2008.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
So the FED hiked again, and lifted the expected terminal rate to above 5% with the majority of board members agreeing this this projection. So, the markets and the FED are now not on the same page, with traders still betting on lower rates during 2023.
In addition, a slowing growth rate and higher unemployment means future earnings will be lower, suggesting that markets are over optimistic.
Things are as they say, complicated.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Today’s post is brought to you by Ribbon Property Consultants.
If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.
Buying property, is both challenging and adversarial. The vendor has a professional on their side.
Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.
Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.
Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.
My latest Friday afternoon chat with Journalist Tarric Brooker, as we walk through the key charts as we come to the end of 2022. So, what might 2023 look like?
Go to the Walk The World Universe at https://walktheworld.com.au/
Links to Tarric’s charts and recent articles:
https://avidcom.substack.com/p/charts-that-matter-9th-december?sd=pf
https://avidcom.substack.com/p/how-long-can-australians-keep-spending
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.
https://www.canstar.com.au/team-members/steve-mickenbecker/
Go to the Walk The World Universe at https://walktheworld.com.au/
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.
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.
I caught up with Peter Marshall from Mozo to discuss the latest following the RBA 25 basis points rise yesterday. What is going to happen ahead, and how should households be planning to manage under the new higher-rate environment? And of course, after the eighth, comes the ninth…. etc….
Peter Marshall has been working in the Australian banking and finance industry for over 20 years and oversees Mozo’s extensive product database. He is regularly sought out for his expert commentary and analysis on banking and interest rates trends by print, radio and TV media.
Go to the Walk The World Universe at https://walktheworld.com.au/
The RBA will likely hike rates again tomorrow, so we look at the potential impact, the the estimated terminal rates across the big four – there are significant variations.
The market is also expecting rates higher for longer.
Go to the Walk The World Universe at https://walktheworld.com.au/
Today’s post is brought to you by Ribbon Property Consultants.
If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.
Buying property, is both challenging and adversarial. The vendor has a professional on their side.
Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.
Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.
Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.
