Small and mighty: Meet the challenger banks nipping at the heels of the big four

July 20, 2018

This article originally appeared on Smart Company on 19/7/18, written by Stephanie Palmer-Derrien. A slew of challenger banks are poised to burst onto the Australian finance scene, in a bid to take on the big four, and change the way that Aussies think about banking. Typically offering cloud-based banking services without a bricks-and-mortar branch in sight,…

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Putting APRA’s Stress Test to the Test.

July 11, 2018

This article originally appeared on LF Economics on 12/7/2018. So yesterday APRA came out and said that if unemployment rose to 11%, House prices fell by 35%, and the Chinese economy tanked, that the Australian banking system would be able to withstand the economic stresses associated with this type of economic destruction.   So let’s…

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Why aren’t we using superannuation to fund mortgages?

July 9, 2018

This article originally appeared on Mortgage Business on 9/7/18. It seems like a logical idea. Superannuation funds need a fixed-income asset to invest in. Lenders need domestic funding. Super, meet mortgages. But Australia’s $2.6 trillion superannuation market is still unwilling to fund home loans. This is not a new argument — people have been debating the…

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Digital Finance Analytics: Mortgage Stress Continues To Claw Higher

July 5, 2018

Digital Finance Analytics (DFA) has released the June 2018 mortgage stress and default analysis update. The latest RBA data on household debt to income to March reached a new high of 190.1 [1] … … so no surprise to see mortgage stress continuing to rise. Across Australia, more than 970,000 households are estimated to be…

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As credit tightens, gluttonous Aussie banks binge on offshore debt

July 4, 2018

This article originally appeared on MacroBusiness on 4/7/18. The Australian Bureau of Statistics (ABS) last week released its National Financial Accounts for the March quarter, which revealed a large 4.8% quarterly rise in Australian banks’ gross external liabilities (offshore borrowings), and a significant 9.8% increase over the year. Bonds (+$24 billion) and One Name Paper (+$12 billion)…

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Credit Suisse: Aussie credit crunch intensifying

June 26, 2018

This article is written by Damien Boey of Credit Suisse. Duration of the credit crunch Yesterday, we published an article explaining why we think that credit tightening will be deeper for longer (attached). Our argument is as follows: 1.    1Q APRA data and credit spreads point to a 10-20% drop in loan approvals in the next…

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New bank mortgage loans to fall 8 per cent amid APRA, royal commission crackdown

June 20, 2018

This article originally appeared on Domain on 20/6/2018. Australians will be able to borrow $30,000 less to buy a home as banks tighten their lending practices amid new regulations and a bruising royal commission. The average new loan size is expected to fall about 8 per cent – from $379,000 to $349,000 – as banks…

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Digitalisation of money and the future of monetary policy

June 18, 2018

This article originally appeared on VOX EU on 12/6/2018, written by Peter Bofinger. The digitalisation of money has the potential to change traditional structures of the financial system. This column discusses four areas in which it may have an impact, and argues that while digitalisation will not erode the importance of central banks, banks could…

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RBA has lost control, banks must hike mortgage rates

June 8, 2018

Banks are quite entitled to increase interest rates at any time. However, increasing due to funding cost increases which may be caused by their own lending policies does not reflect well. In the shadow of the Banking Royal Commission perhaps they should hold off, but I doubt it. This article originally appeared on Credit Suisse,…

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Millennials AREN’T killing mortgage broking

May 29, 2018

This article originally appeared on Rate City on 23/5/2018. Australia’s millennials have been accused of killing everything from landline phones to department stores, movie theatres, doorbells and golf, but not the mortgage broking industry, which has more millennial customers than any other demographic. According to the Roy Morgan single source survey, millennials (1976-1990) make up nearly…

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