Changes en route for IRB mortgage risk weights… ANZ CEO warns of cheap-credit risks… Treasurer waffling on housing affordability...
APRA set to tighten mortgage risk weights?
The recent speech from APRA Chairman, Wayne Byers has provided the best indication yet that the much anticipated changes to IRB mortgage risk weights for Australian major banks are imminent, according to article in Macro Business.
With NAB recently deciding to undertake a large capital raising, partly in anticipation for these risk weights changes, investors are questioning whether the other major banks will need to follow suit.
Byers indicated that APRA has reviewed the FSI Inquiry report and confirmed it agrees with the recommendation for increases in average mortgage risk weights for IRB banks, as well as the recommendation that Australian ADIs need to be “unquestionably strong”.
However, APRA has made it clear it will determine the details of the changes and their implementation in conjunction with the anticipated global regulatory changes, commonly known as Basel 4, according to the piece.
Given the debate concerning Australia’s housing market, the Chairman was at pains to point out that APRA will be able to move ahead with mortgage risk weight changes before any other impacts from Basel 4, including the determination of an unquestionably strong benchmark.
ANZ CEO warns of cheap-credit risks
ANZ chief executive Mike Smith has sounded a fresh warning about the danger of asset bubbles, as investors chase returns by piling into riskier investments, according to an article in the Sydney Morning Herald.
The boss of the country's third largest bank on Wednesday highlighted the growing risks unleashed by ultra-cheap credit, including in the $1.3 trillion mortgage market, which is a key worry for the country's top regulators. While Mr Smith denied Australia's housing market was in a bubble, he conceded there was a risk of one forming, and said lending to property investors was failing to properly reflect the risks.
It came as a new report from JP Morgan predicted major banks' profitability would be squeezed as they were forced to raise an extra $14 billion in response to looming capital rules, which are also a response to concerns lenders' portfolios are too skewed towards housing.
"I think pricing of risk has not been aligned for some time, and that's been created by this massive amount of liquidity globally. The hunt for yield has driven prices to sort of crazy levels in many asset classes and in many different countries," Mr Smith said.
Treasurer waffling on housing affordability
According to an article in the UK Guardian, with prices skyrocketing, more people now borrowing for investment properties than for houses they want to live in and Sydney mortgages for first homebuyers at record lows, most people think it is.
“We had a further discussion on housing in Australia and we are particularly alarmed at the inability of young people to be able to access the housing market in a way they previously have been,” he said in a recent address.
But when the ALP raised housing affordability and fears of a Sydney housing “bubble” the government accused the opposition of wanting houses to be worth less, or as Hockey put it on Wednesday to “smash house prices”.
With house prices in Sydney rising five times faster than wages growth over the past two years and homeowners in the city already paying on average 35 per cent of their income on mortgage repayments, often it would not. Especially if the good job is one that doesn’t come with particularly good pay, like those of many essential service providers.
The recent speech from APRA Chairman, Wayne Byers has provided the best indication yet that the much anticipated changes to IRB mortgage risk weights for Australian major banks are imminent, according to article in Macro Business.
With NAB recently deciding to undertake a large capital raising, partly in anticipation for these risk weights changes, investors are questioning whether the other major banks will need to follow suit.
Byers indicated that APRA has reviewed the FSI Inquiry report and confirmed it agrees with the recommendation for increases in average mortgage risk weights for IRB banks, as well as the recommendation that Australian ADIs need to be “unquestionably strong”.
However, APRA has made it clear it will determine the details of the changes and their implementation in conjunction with the anticipated global regulatory changes, commonly known as Basel 4, according to the piece.
Given the debate concerning Australia’s housing market, the Chairman was at pains to point out that APRA will be able to move ahead with mortgage risk weight changes before any other impacts from Basel 4, including the determination of an unquestionably strong benchmark.
ANZ CEO warns of cheap-credit risks
ANZ chief executive Mike Smith has sounded a fresh warning about the danger of asset bubbles, as investors chase returns by piling into riskier investments, according to an article in the Sydney Morning Herald.
The boss of the country's third largest bank on Wednesday highlighted the growing risks unleashed by ultra-cheap credit, including in the $1.3 trillion mortgage market, which is a key worry for the country's top regulators. While Mr Smith denied Australia's housing market was in a bubble, he conceded there was a risk of one forming, and said lending to property investors was failing to properly reflect the risks.
It came as a new report from JP Morgan predicted major banks' profitability would be squeezed as they were forced to raise an extra $14 billion in response to looming capital rules, which are also a response to concerns lenders' portfolios are too skewed towards housing.
"I think pricing of risk has not been aligned for some time, and that's been created by this massive amount of liquidity globally. The hunt for yield has driven prices to sort of crazy levels in many asset classes and in many different countries," Mr Smith said.
Treasurer waffling on housing affordability
According to an article in the UK Guardian, with prices skyrocketing, more people now borrowing for investment properties than for houses they want to live in and Sydney mortgages for first homebuyers at record lows, most people think it is.
“We had a further discussion on housing in Australia and we are particularly alarmed at the inability of young people to be able to access the housing market in a way they previously have been,” he said in a recent address.
But when the ALP raised housing affordability and fears of a Sydney housing “bubble” the government accused the opposition of wanting houses to be worth less, or as Hockey put it on Wednesday to “smash house prices”.
With house prices in Sydney rising five times faster than wages growth over the past two years and homeowners in the city already paying on average 35 per cent of their income on mortgage repayments, often it would not. Especially if the good job is one that doesn’t come with particularly good pay, like those of many essential service providers.
