Mortgage tightening paying off for big banks... Banks assessing overhaul for risk in Basel... Tasmania still the worst state for housing plan approvals, says Property Council...
Loan tightening stabilizes Australia housing market
Australian banks are reining in their most profitable business after increasingly stern warnings from regulators that tighter mortgage lending standards may be needed to prevent a housing bubble in Sydney from destabilizing the financial system, according to an article in the South China Morning Post
The country's four major lenders, Commonwealth Bank of Australia, Westpac Banking Corp, ANZ Banking Group and National Australia Bank, have all begun to tighten lending. The measures include stricter criteria to approve investor loans, cutting interest rate discounts and raising deposits on loans to up to 20 per cent from as little as five per cent just a month ago.
This is a big shift for the Australia's banks, which emerged from the global financial crisis to post record profits in recent years on the back of mortgage lending. Home loans account for 40 to 60 per cent of the major banks' total loans.
"If the regulators force the banks to slow investor lending growth and it isn't offset by any significant pickup in owner-occupied housing or business credit, this will no doubt hurt revenue growth," said Omkar Joshi, an investment analyst at Watermark Funds Management.
Banks assessing overhaul for risk in Basel
As global regulators convene in Basel, Switzerland, on Tuesday to debate an overhaul of the way banks assess risk, APRA chairman Wayne Byres will be a part of a group that will discuss changes to the way in which all banks model for risk, and the implementation of a capital "floor" that will prevent big banks deviating too far from the models used by smaller banks. These changes are being described by some banks and analysts as "Basel 4.”
APRA remains supportive of maintaining a risk-based approach to risk modelling. Jeremy Rudin, the head of the Canadian regulator, OSFI, will also argue at this week's meeting that capital requirements should be based primarily on risk.
With Australia's Treasury secretary John Fraser last week warning that Sydney property is "unequivocally" in a bubble, the Joint Forum has also told prudential regulators to be aware that the unprecedented low-interest-rate environment is inflating asset prices, which means banks require tougher supervision.
"With the current low-interest-rate environment possibly generating a "search for yield" through a variety of mechanisms, supervisors should be cognisant of the growth of such risk-taking behaviours and the resulting need for firms to have appropriate risk management processes," it said.
Tasmania still the worst state for housing plan approvals, says Property Council
Tasmania has once again been named the worst performing state when it comes to planning approvals.
The Property Council of Australia's 2015 Development Assessment Report Card rated Tasmania with an overall score of 5.6, the lowest it has scored in the previous two assessment reports by the group.
New South Wales has a rate of 5.9, while Western Australia and the Northern Territory were found to be the best performing jurisdictions. The report also slammed the sluggish progress of the state’s introduction of new planning schemes, adding that the planning systems are "overly litigious", reports the ABC Online.
The Property Council, which represents developers, builders and real estate agents in the country, said that the introduction of a single house code was flawed in Tasmania and the state fails to have a sufficient strategic policy direction.
"The reason we rank last is because planning is so complicated. And when you look at where Tasmania has come from, the reform steps that we need to take are extremely significant, and are going to take an extended period of time,” the group's Tasmanian executive director, Brian Wightman, was quoted as saying by the ABC.
Australian banks are reining in their most profitable business after increasingly stern warnings from regulators that tighter mortgage lending standards may be needed to prevent a housing bubble in Sydney from destabilizing the financial system, according to an article in the South China Morning Post
The country's four major lenders, Commonwealth Bank of Australia, Westpac Banking Corp, ANZ Banking Group and National Australia Bank, have all begun to tighten lending. The measures include stricter criteria to approve investor loans, cutting interest rate discounts and raising deposits on loans to up to 20 per cent from as little as five per cent just a month ago.
This is a big shift for the Australia's banks, which emerged from the global financial crisis to post record profits in recent years on the back of mortgage lending. Home loans account for 40 to 60 per cent of the major banks' total loans.
"If the regulators force the banks to slow investor lending growth and it isn't offset by any significant pickup in owner-occupied housing or business credit, this will no doubt hurt revenue growth," said Omkar Joshi, an investment analyst at Watermark Funds Management.
Banks assessing overhaul for risk in Basel
As global regulators convene in Basel, Switzerland, on Tuesday to debate an overhaul of the way banks assess risk, APRA chairman Wayne Byres will be a part of a group that will discuss changes to the way in which all banks model for risk, and the implementation of a capital "floor" that will prevent big banks deviating too far from the models used by smaller banks. These changes are being described by some banks and analysts as "Basel 4.”
APRA remains supportive of maintaining a risk-based approach to risk modelling. Jeremy Rudin, the head of the Canadian regulator, OSFI, will also argue at this week's meeting that capital requirements should be based primarily on risk.
With Australia's Treasury secretary John Fraser last week warning that Sydney property is "unequivocally" in a bubble, the Joint Forum has also told prudential regulators to be aware that the unprecedented low-interest-rate environment is inflating asset prices, which means banks require tougher supervision.
"With the current low-interest-rate environment possibly generating a "search for yield" through a variety of mechanisms, supervisors should be cognisant of the growth of such risk-taking behaviours and the resulting need for firms to have appropriate risk management processes," it said.
Tasmania still the worst state for housing plan approvals, says Property Council
Tasmania has once again been named the worst performing state when it comes to planning approvals.
The Property Council of Australia's 2015 Development Assessment Report Card rated Tasmania with an overall score of 5.6, the lowest it has scored in the previous two assessment reports by the group.
New South Wales has a rate of 5.9, while Western Australia and the Northern Territory were found to be the best performing jurisdictions. The report also slammed the sluggish progress of the state’s introduction of new planning schemes, adding that the planning systems are "overly litigious", reports the ABC Online.
The Property Council, which represents developers, builders and real estate agents in the country, said that the introduction of a single house code was flawed in Tasmania and the state fails to have a sufficient strategic policy direction.
"The reason we rank last is because planning is so complicated. And when you look at where Tasmania has come from, the reform steps that we need to take are extremely significant, and are going to take an extended period of time,” the group's Tasmanian executive director, Brian Wightman, was quoted as saying by the ABC.
