Two per cent interest rate maintained by RBA, outlook unclear…. Big banks react to warnings from regulators…. Prime Minister brushes back mortgage criticism
RBA hold interest rate as uncertainty continues
Australia’s central bank held its cash-rate target at a record-low two per cent on Tuesday, but left markets unsure of what the next move would be, according to an article in the Wall St. Journal.
While forecasting no change, most economists were expecting the central bank to signal a willingness to cut rates again to counter the headwinds of a still elevated currency, weak commodity prices, and a slowdown in China.
House prices in major capital cities are rising as a result of the cheap cost of mortgages, while construction of homes, especially apartments, is soaring, the article reads.
“Information on economic and financial conditions to be received over the period ahead will inform the board’s assessment of the outlook, and hence whether the current stance of policy will most effectively foster sustainable growth and inflation,” Reserve Bank of Australia Gov. Glenn Stevens said in a statement.
Big banks react to warnings from regulators
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 destabilising the financial system, according to an article from Reuters.com
The country's four major lenders, Commonwealth Bank of Australia (CBA), Westpac Banking Corp, ANZ Banking Group Ltd and National Australia Bank have all begun to tighten lending to investors in recent weeks. Home loans account for 40 pe rcent to 60 per cent of the major banks' total loans.
This is a big shift for Australia's banks, according to the article, which emerged from the global financial crisis to post record profits in recent years on the back of mortgage lending.
"If the regulators force the banks to slow investor lending growth and it isn't offset by any significant pick-up in owner-occupied housing or business credit, this will no doubt hurt revenue growth," said Omkar Joshi, an investment analyst who helps oversee about $1 billion at Watermark Funds Management.
Prime Minister brushes back mortgage criticism
Australian PM Tony Abbott has brushed off the Treasury secretary’s comments about a housing bubble in Sydney by instead accusing Bill Shorten of wanting house prices to go down, according to an article from the UK Guardian.
Abbott said millions of Australians had home mortgages and the last thing they wanted to see was a decline in the value of their most important asset, he said in comments directed to the opposition leader, claiming that Shorten was saying people’s houses were worth too much and was “talking down our economy”.
“This is someone who wants to be the prime minister of Australia and he wants your house to be worth less,” Abbott said, pitching his comments towards existing home owners rather than people who were struggling to enter the property market.
“What I don’t want him to do is wreck the housing market of Australia ... Just imagine how you would go if you had to repay your mortgage and your house was not worth what it was when you bought it. That is the spectre that this leader of the opposition is now holding out to the people of Australia.”
Australia’s central bank held its cash-rate target at a record-low two per cent on Tuesday, but left markets unsure of what the next move would be, according to an article in the Wall St. Journal.
While forecasting no change, most economists were expecting the central bank to signal a willingness to cut rates again to counter the headwinds of a still elevated currency, weak commodity prices, and a slowdown in China.
House prices in major capital cities are rising as a result of the cheap cost of mortgages, while construction of homes, especially apartments, is soaring, the article reads.
“Information on economic and financial conditions to be received over the period ahead will inform the board’s assessment of the outlook, and hence whether the current stance of policy will most effectively foster sustainable growth and inflation,” Reserve Bank of Australia Gov. Glenn Stevens said in a statement.
Big banks react to warnings from regulators
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 destabilising the financial system, according to an article from Reuters.com
The country's four major lenders, Commonwealth Bank of Australia (CBA), Westpac Banking Corp, ANZ Banking Group Ltd and National Australia Bank have all begun to tighten lending to investors in recent weeks. Home loans account for 40 pe rcent to 60 per cent of the major banks' total loans.
This is a big shift for Australia's banks, according to the article, which emerged from the global financial crisis to post record profits in recent years on the back of mortgage lending.
"If the regulators force the banks to slow investor lending growth and it isn't offset by any significant pick-up in owner-occupied housing or business credit, this will no doubt hurt revenue growth," said Omkar Joshi, an investment analyst who helps oversee about $1 billion at Watermark Funds Management.
Prime Minister brushes back mortgage criticism
Australian PM Tony Abbott has brushed off the Treasury secretary’s comments about a housing bubble in Sydney by instead accusing Bill Shorten of wanting house prices to go down, according to an article from the UK Guardian.
Abbott said millions of Australians had home mortgages and the last thing they wanted to see was a decline in the value of their most important asset, he said in comments directed to the opposition leader, claiming that Shorten was saying people’s houses were worth too much and was “talking down our economy”.
“This is someone who wants to be the prime minister of Australia and he wants your house to be worth less,” Abbott said, pitching his comments towards existing home owners rather than people who were struggling to enter the property market.
“What I don’t want him to do is wreck the housing market of Australia ... Just imagine how you would go if you had to repay your mortgage and your house was not worth what it was when you bought it. That is the spectre that this leader of the opposition is now holding out to the people of Australia.”
