Arrears/performance/credit quality. (255 items)

Household insolvency adds to banking risks

Risks to financial stability "are primarily macroeconomic in nature, rather than direct risks to the stability of financial institutions", the Reserve Bank of Australia declares in its Financial Stability Review, released on Thursday.The April 2017 edition of this half-yearly report shares public domain versions of analysis no doubt considered this year among the Council of Financial Regulators, culminating in APRA's outline of additional macroprudential measures at the end of March.Around one-third of borrowers have either no accrued buffer or a buffer of less than one month's repayments, the RBA said. read more

APRA imprint an elusive force in Sydney and Melbourne

Improved clearance rates over the weekend point to business as usual in the property market.It's one reason APRA's latest turn of the vice on banks' loans to property investors is "unlikely to substantially slow the increases in dwelling values, particularly in Sydney and Melbourne," Cameron Kusher, head of research at CoreLogic believes.?Rather, investment fundamentals may, over time, leave their mark on the frothy property prices of Australia's two largest cities, the chief commentator for the influential research house believes. APRA's activism, in Kusher's view, only extends the list of factors at play."From an investor's rationale, surely the proposition for investment, particularly in Sydney and Melbourne is starting to weaken," Kusher wrote in a blog post yesterday."Housing markets are likely approaching their peak," he said. read more

Affluent unperturbed by interest only vice

A socio-economic analysis of the users and abusers of the tax break that is negative gearing on residential investment property casts a doubtful spotlight on the effect APRA's tightening of the vice on interest-only loans may have on a sector pursued with gusto by many lenders.The affluence and wealth of the bulk of investment property borrowers will leave sceptics wondering how much bank caution toward this critical customer segment will dampen credit demand. read more

Stretched bank balance sheets worry Lowe

More activism is probable on lending standards, RBA governor Philip Lowe told a Melbourne dinner last night. Taking on a public relations job so far side-stepped since APRA tightened its banking vice last week, Lowe put worries over Australian banking sector stability and resilience in context."These prudential measures help lessen the amplification of the cycle we get from borrowing and reduce the risk of developments on the financial side weakening the resilience that our economy has exhibited for many years," he said. "Ideally, this would be achieved by financial institutions acting themselves, without the need for prudential guidance. But sometimes prudential guidance can help the whole system adjust." read more

Non-banks drawn to APRA macroprudential web

Pepper, Liberty, La Trobe, FirstMac, Resimac, AFG Home Loans, RedZed - the whole spread of non-banks –  are all APRA regulated now, at least when it comes to macroprudential policy and the use of more handbrakes on questionable residential lending.One vital, if final, detail in a long list of measures set out by the Australian Prudential Regulation Authority on Friday is directed at making a gutsy and vibrant non-bank mortgage funding sector conform to restraints equivalent to those imposed on authorised deposit-taking institutions.ADIs funding "warehouses" (licks of wholesale lending to non-banks to sustain new business) must "ensure that the lenders' mortgage lending standards are consistent with industry-wide sound practices," APRA decreed on Friday. read more

Bubble worry brings APRA back to the fray

Weeks of guesswork ended on Friday, with APRA dictating a long list of new macroprudential policy measures.The professional worrywarts at the Australian Prudential Regulation Authority did not mess around in stating their rationale, citing "the resilience of lenders, as well as on the household sector more broadly."APRA's worries are decidedly too-faced, with its chief Wayne Byres writing of the imperative of assuring the credit flow for "the increasing supply of newly completed construction which must be absorbed in the year ahead." APRA's other aims all pull the other way, choking growth in credit supply by demanding ever more sober assessment by lenders. read more

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