• Bank boss backs targeted measures to cool property demand

    Date: 2019.03.16 | Category: 南京夜网 | Tags:

    Bendigo and Adelaide Bank chief Mike Hirst has endorsed targeted macroprudential measures by regulators to cool investor demand for property, arguing unusual action is warranted for extraordinary times.
    Nanjing Night Net

    “The global economy is just limping along and the G20 is addressing that. Because we’re in that situation, however, a few countries have taken a new approach through quantitative easing, for example,” Mr Hirst said.

    “Given that fact it is reasonable for regulators to look at new ways of countering the unintended consequences of that.”

    While Australia  did not have to resort to printing money, it still had record low interest rates, which had driven investor demand.

    “I think it is well worth considering more targeted responses if you don’t want to impact the broader economy too heavily.”

    Bendigo does not lend much to investors in inner city property and has lost market share in investment lending to its bigger rivals.

    Privately, many bankers say they are expecting some form of action from APRA on investor lending before the end of the year to try to reduce the risk of a sudden drop in inner city property prices, which could infect the rest of the economy.

    Mr Hirst’s comments come after Fairfax Media reported that APRA bank stress tests conducted earlier this year found a severe downturn in the economy would wipe out all capital the biggest banks are holding against mortgages.

    None of the big four banks would comment on these findings on Sunday, but NAB’s head of retail banking, Gavin Slater, told the Australian Financial Review last week: “I believe we – NAB and the industry – are well capitalised.”

    As loans to property investors in Sydney have topped 60 per cent of all new housing loans in the year to September, options being considered by the Reserve Bank and the Australian Prudential Regulation Authority include raising the capital held against losses on loans to investors, making these more expensive loans to make, and raising the loan serviceability “buffer” banks must add on to the present interest rates on investor loans.

    The Reserve Bank and APRA have repeatedly said there is no evidence that macroprudential tools work, but have flagged their possible use to deal with the “imbalance” of so much lending going to investors who have not been boosting the economy by building new homes.

    Most of the big banks argue such regulatory manoeuvres are unjustified, citing relatively low lending growth and little evidence of a reduction in lending standards.

    Ken Hanton, director of asset transformation at NAB, told the Australian Securitisation Conference in Sydney last week “neither [the RBA nor APRA] have an appetite to do this. They have managed to keep lenders in check without using these blunt tools”.

    The RBA, however, has said it is more worried about knock-on effects on the economy of a sudden sell-off in investor properties sparked by poor returns on rental yields rather than bank survival. The biggest banks just happen to be among the most exposed to investor loans.

    This story Administrator ready to work first appeared on Nanjing Night Net.