Homeowners face refi challenges as home values fall

From Australian Broker

As many as 15% of surveyed homeowners have faced challenges when trying to refinance, due to falling property prices.

Research conducted by mortgage lender State Custodians, quizzed 1,022 home owners on their ability to refinance in the current climate, as national average home values continues to fall.

According to CoreLogic market data for the month of July, capital city home prices declined by 0.6% and now stand 2.4% lower over the year; it is the largest monthly decline in six and a half years. The national home price index also declined by 0.6% to average a 1.6% decline over the year.

The figures published by State Custodians also revealed that young people were the most affected, with around 34% of those under the age of 34 saying they’ve been unsuccessful in re-financing because of declining property values.

“Property prices have been stagnating and falling across much of Australia for some time now – especially in the major capital markets of Sydney and Melbourne – which has made refinancing tougher for some,” State Custodian general manager Joanna Pretty said in a statement.

“Anyone who has not yet built up a substantial amount of equity in property or whose property has fallen in value is more likely to be unsuccessful in seeking refinancing,” she added.

However, there is some good news as 29% of respondents said they are confident their property’s value has improved since purchase. Further, 41% of people with mortgages have successfully refinanced their home and experienced no problem getting a better rate as their property’s value increased.

Pretty said that when refinancing, homeowners and investors are often overly confident that their property increased in value.

“Declines in property value are influenced by what is happening in the market and the land value of the area,” she said. She explained that valuation of homes even in good areas can still come back below expectation due to poor property maintenance and upkeep.

Pretty suggested that “it may also be helpful to be present when a valuer visits to point out improvements that may not be immediately apparent, such as solar panels.”

Elsewhere, AB says brokers can help the thousands of people labelled ‘mortgage prisoners’ by directing them to non-bank lenders, is the call from an industry association.

Mortgage prisoners are borrowers unable to refinance to a lower interest rate due to changed lending criteria by the banks.

The Finance Brokers Association of Australia (FBAA) has said that going to non-banks is the way to overcome this.

FBAA executive director Peter White said the government should also step in and push banks to be realistic with their modelling.

He revealed he personally brought up the issue with federal treasurer Scott Morrison when the two caught up at a recent lunch.

White said banks have recently increased the interest rate ‘buffer’ they add onto a loan to ensure the borrower has capacity to pay if rates rise, but the extent of the increase has led to a situation where borrowers who are already paying a mortgage are being rejected for loans that actually reduce their repayments.

He said, “It’s madness. Someone wants to refinance to pay a lower rate yet the bank adds an extra 4% to the interest rate and decides the borrower can’t afford to pay less.”

He said while he understands the need for a lender to add a safety net to the prevailing interest rate, they are now effectively doubling the rate to a level where the borrower can’t meet the new lending criteria.

He added, “This doesn’t affect the wealthy, it affects those who can least afford it and it has almost stalled the home loan refinance market.”

The assessment change is a knee-jerk reaction by the banks to recent inquiries and the royal commission, according to White, who predicts the banks may start to set an even higher rate.

He said the situation only reinforces the value of the expert advice that finance brokers provide and has urged brokers to be proactive in the space.

He said, “Many Australians are not even aware of non-bank lenders, let alone the difference or that they are not under some of the same regulatory oversight, so we must educate and help them. We know the banks won’t!”

ASIC approves the Banking Code of Practice

ASIC has approved the Australian Banking Association’s (ABA’s) new Banking Code of Practice (the Code).

ASIC’s approval of the Code follows extensive engagement with the ABA, following a comprehensive independent review and extensive stakeholder consultation. The ABA made additional significant changes to the Code in order to satisfy ASIC that it met our criteria for approval.

This is the first comprehensive broad-based industry code ASIC has approved under its relevant powers.

The Code will commence operation from 1 July 2019.

Significant new protections for small businesses

The new Code provides for improved protections for small business borrowers and expands the reach and impact of legal protections against unfair contract terms. For small businesses who borrow up to $3 million, the Code provides that lending contracts should not contain a range of potentially unfair and one-sided terms. Unfair contract terms protections in the law apply to businesses who borrow up to $1 million.

At its current setting of applying to small businesses who borrow up to $3 million, the Code will cover the considerable majority – between 92-97% – of businesses in Australia.

To ensure the settings in the Code provide a high level of coverage of the small business sector, ASIC’s approval is conditional on an independent review of the definition of small business within 18 months of the Code’s commencement. This targeted review will test the adequacy and application of the Code’s small business coverage in practice, and will occur well before the Code’s comprehensive review, due three years after its commencement.

At the same time, ASIC will collect quarterly data from banks and the Australian Financial Complaints Authority to monitor the extent of the Code’s coverage of small business. ASIC will ensure that this data is made public every six months. This will provide the public with ongoing transparency about the coverage of the Code.

Expanded protections for consumers

The Code has built on and enhanced the existing protections for consumers in the 2013 Code.

The new Code includes:

  • provisions for inclusive and accessible banking, including for vulnerable customers, customers on low incomes and Indigenous customers;
  • protections relating to the sale of consumer credit insurance (CCI) including a deferred sales period of four days for CCI for credit cards and personal loans sold in branches and over the phone;
  • protections for guarantors of loans, for instance, giving prospective guarantors generally three days to consider information about a guarantee and requiring banks to only enforce a guarantee once they have taken action against the borrower;
  • rules requiring credit card customers to receive reminders about balance transfer promotional periods ending, as well as more consistent treatment about how repayments are applied; and
  • enhanced processes for assisting customers in financial difficulty and processes for resolving complaints.

Monitoring and enforceability

All ABA member banks will be required to subscribe to the Code as a condition of their ABA membership and the relevant protections in the Code will form part of the banks’ contractual relationships with their banking customers.

The Code will be administered and enforced by an independent monitoring body, the Banking Code Compliance Committee (BCCC). Any person will be able to report a breach of the Code to the BCCC, and consumers and small businesses with disputes about the Code protections will be able to have those disputes heard by the new Australian Financial Complaints Authority.

ASIC notes the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry may make findings relevant to the Code. ASIC may review its approval of the Code in light of the Royal Commission findings.

Background

ASIC has provided guidance on its approach to approving codes, including how to obtain and retain approval in Regulatory Guide 183 Approval of financial services sector codes of conduct (RG 183).

In approving the Code, ASIC considered that:

  • the rules in the Code are binding on the ABA’s members and form part of the contracts between banks and their customers;
  • the Code was developed and reviewed in a transparent way, which involved significant consultation with relevant stakeholders including consumer and small business groups; and
  • the Code is supported by effective administration and compliance mechanisms. The BCCC will have oversight on banks’ Code compliance, tools to require banks’ cooperation with their monitoring and investigations, and a range of sanctions for non-compliance with Code provisions.

Changing demographics to alter dwelling demand

From The Adviser

As Generation Y begins to enter the housing market, there could be a change in the types of dwellings sought after, a new report has suggested.

According to industry analyst and economic forecasters BIS Oxford Economics, changes to the age profile of the population over the next decade will likely result in a shift in the type of demand for dwellings, as Generation Y – those currently aged around 20 to 34 years old – begin to have their own families and move onto the property ladder.

According to BIS’s Emerging Trends in Residential Market Demand report, which examines trends revealed by a detailed analysis of Census data from the past 25 years, there will be “solid demand for units and apartments over the next decade” driven by an overall increase in “the propensity to be living in higher density dwellings across all age groups”.

The report outlines that while there will be continued demand for units and apartments over the next decade, the growth in demand will eventually slow.

Senior manager for residential property at BIS Oxford Economics, Angie Zigomanis, has suggested that, over the past 15 years, there has been rapid population growth among 20-to 34-year olds, as well as strong net overseas migration inflows, which have helped support the boom in apartment construction in the past decade by supplying a steady stream of new tenants to the market.

Mr Zigomanis also noted that there is evidence that people are staying in apartments and townhouses longer.

The analyst highlighted that, in Sydney, more than half (53 per cent) of households aged 35-to 39-years old, and nearly half (49 per cent) of households with children at a pre-school age, now live in these smaller dwellings.

While households have typically favoured townhouses over apartments, in Sydney and Melbourne, there has been an acceleration in the take-up of apartments by both groups since the 2011 Census. The trend has also been similar, although less pronounced in Brisbane, Adelaide and Perth, the report added.

Looking to the future, BIS notes that rising demand for smaller dwellings by Generation Y over the next decade would be apparent across all capital cities, although will be most pronounced in Sydney, and to a lesser extent Melbourne, where separate houses are least affordable.

In Brisbane, Adelaide and Perth, it argued, householders would be much more likely to be in a detached house once they enter their late 30s and 40s, and strong demand for new separate houses is therefore likely to continue.

However, BIS argues that it is likely that rising house prices and decreasing housing affordability in the most desirable locations in the capital cities are causing “an increasing trade-off” for some couples and family buyers between price, size of dwelling, and location, with many seeking smaller and more affordable dwellings to remain close to their desired location.

The analysts argued that, should this trade-off activity increase as Generation Y gets older, then this provides an opportunity for developers in all capital cities to meet this demand, especially given the fact that the boom in multi-unit dwelling construction has up until now been investment-driven “with design being geared toward Generation Y renters living as singles, couples without children, and in share households,” BIS said.

“To meet the potential growing number of Generation Y families in established areas, multi-unit dwellings will need to be designed to be more appropriate to family life, offering more space, both indoor and some outdoor, or located adjacent to public outdoor spaces,” said Mr Zigomanis.

“In particular, new apartment designs will need to change to provide more appropriate product for Generation Y families.”

However, should Generation Y follow the trend of the previous generations and eschew renting for owning their own, larger dwellings as they age, then this would “support a decade-long boom in demand for new houses and land in the new housing estates on the outskirts of Australia’s major cities and affordable major regional centres,” said Mr Zigomanis.

“Pressure is also likely to be maintained on house prices in established areas, as competition remains strong for Generation Y families looking to remain in the established areas where they have already been living and renting in smaller apartments,” he said.

HILDA Data Confirms Household Financial Pressure

From Nine.com.au.

Single-parent families are experiencing a near-unprecedented level of housing stress as soaring house prices force many into unaffordable rental properties.

Analysis conducted by the Melbourne Institute as part of its annual HILDA survey revealed over 20 percent of single-parent families are stretching their budgets further than ever to keep up with annual rent rises or changes in their mortgage.

Amongst all Australians, household stress peaked at an all-time high in 2012, when 11.2 percent of all Australians were classified as having to make “unduly burdensome” mortgage repayments.

In economic terms, housing stress is technically defined as spending more than 30 percent of a household’s disposable income on housing costs, not including council rates.

In 2016, where the HILDA survey data ends, 9.6 percent of the population were experiencing housing stress.

Although single-parent families were found to be under the most dire levels of housing stress, the survey found that single elderly Australians and renters are also suffering under the weight of paying rent or covering their mortgage.

Couples without children were found to have the lowest levels of housing stress.

“Among those with housing costs, private renters have the highest rate of housing stress and owners with mortgages have the lowest rate,” wrote HILDA survey researchers.

“Moreover, over the HILDA Survey period, housing stress has increased considerably among renters—particularly renters of social housing—whereas it has decreased slightly for home owners with a mortgage.”

The survey also found that the type of home you owned or rented was directly correlated to the likelihood of having difficulty in making rent or mortgage repayments.

Australians living in apartments were found to have the highest rates of housing stress, followed by those living in semi-detached houses.

People living in separate, free-standing homes were found to have the lowest rates of housing stress – most likely because they live away from heavily-populated urban centres.

“Housing stress is generally more prevalent in the mainland capital cities, with Sydney in particular standing out,” wrote the researchers.

“However, differences across regions are perhaps not as large as one might expect given the differences in housing costs across the regions.

“Also notable is that housing stress is very high in other urban Queensland. It is only in the last sub-period (2013 to 2016) that it is not the region with the highest rate of housing stress, and even in that period only Sydney has a higher rate.”

The HILDA survey follows the lives of more than 17,000 Australians over the course of their lifetimes and published information on an annual basis on many aspects of their lives including relationships, income, employment, health and education.

The latest findings back up analysis from Digital Finance Analytics (DFA), which estimates that more than 970,000 Australian households are now believed to be suffering housing stress.

That equates to 30.3 percent of home owners currently paying off a mortgage.

Of the 970,000 households, DFA estimates more than 57,100 families risk 30-day default on their loans in the next 12 months.

“We continue to see households having to cope with rising living costs – notably child care, school fees and fuel – whilst real incomes continue to fall and underemployment remains high,” wrote DFA principal Martin North.

“Households have larger mortgages, thanks to the strong rise in home prices, especially in the main eastern state centres, and now prices are slipping.

“While mortgage interest rates remain quite low for owner occupied borrowers, those with interest only loans or investment loans have seen significant rises.”

IOOF warned for failing to produce documents

From Investor Daily.

Kenneth Hayne has delivered a sharp rebuke to IOOF for failing to produce documents ahead of the royal commission’s public hearings into superannuation, which commence next week.

In a ruling published by the royal commission yesterday, commissioner Kenneth Hayne laid out a timeline of correspondence with IOOF subsidiary Questor Financial Services.

Questor was issued with Notice to Produce NP-962 on Wednesday 11 July 2018, which required the company to produce documents prepared for Questor board meetings (‘board packs’) for each meeting of the board held since 1 July 2011.

The notice required the production of the documents by 4pm Tuesday 17 July.

At 3:30pm on Tuesday 17 July, IOOF solicitors King and Wood Mallesons produced documents in response to the notice, stating: “IOOF believes that the documents being produced constitute complete production in response to the Notice to Produce.”

On examining the documents, solicitors assisting the commission noted that while complete board packs had been produced for the years between 2011 and 2014, for subsequent years only agendas had been produced.

In response to an urgent request from solicitors assisting, Questor’s solicitors said the absence of the files was “inadvertent” and “a result of a technical error”.

Questor continued to fail to produce the documents until 9:48pm Sunday 22 July, with its solicitors noting that Questor “makes privilege claims in relation to parts of the documents produced”.

An affidavit in support of the claims for privilege was eventually supplied by Questor’s solicitors at 1:11am on Wednesday 25 July.

Commissioner Hayne has examined un-redacted versions of the documents, noting that “the claims for privilege appeared large”.

“I reject many of the claims that were made. Many of the documents in respect of which privilege is claimed are not documents that record or refer to communications made for the dominant purpose of IOOF or Questor obtaining legal advice; they do not record or refer to communications of that kind; and, they are not documents created for the dominant purpose of obtaining legal advice,” Mr Hayne said.

He noted that the claims made in respect of board packs dated after 2015 were in “sharp contrast” with the fact that no claims were made about the board packs for 2011–2014.

“Prompt and proper compliance with Notices to Produce is required by law and is essential to the proper execution of the commission’s work. Delays of the kind that have occurred in this case impede the proper work of the commission. Ill-based claims for privilege further impede its work,” Mr Hayne said.

Questor was the subject of parliamentary and senate committee scrutiny in mid-2015 after a number of allegations were aired in the Fairfax press against then IOOF head of research Peter Hilton.

IOOF will be one of the topics discussed at the royal commission public hearings into superannuation which commence on Monday 6 August.

Trade Ledger wins “Ashurst FinTech Startup of the Year”

Digital banking platform start-up, Trade Ledger, has been named the “Ashurst Fintech Start-up of the Year” after expanding into the UK market and signing up a series of major deals in just one year.

Trade Ledger is the world’s first open digital banking platform that gives banks and other business lenders the ability to assess business lending risk in real time. This will enable these lenders to address the £1.2 trillion of undersupply in trade finance lending globally, while providing high-growth companies with the working capital needed to sustain growth.

The award goes each year to a fintech start-up “that has disrupted the financial services sector with new and innovative services, creating competition and transforming the way we experience financial services”.

Trade Ledger has done this by being the first corporate lending platform in the world to automate the entire credit assessment process, assess SME supply chain data in real-time, and calculate risk down to the individual invoice.

This allows banks and other business lenders to tap into the AU$90 billion of unmet business credit demand in Australia, and US$2.1 trillion globally.

“As the global economy transitions towards smaller, high-growth businesses – our all-important start-up and innovation ecosystem – business lenders have an obligation to learn how to supply working capital desperately needed by these businesses of the future,” said Martin McCann, CEO and Co-Founder of Trade Ledger.

“Australian banks and business lenders also face risks on several fronts. On the one hand, they need to improve both their cost/income ratio and their capital efficiencies within this segment that is traditionally considered as high risk. On the other, they are facing increased competition from technology behemoths such as Amazon, Tencent, and eBay, who are all threatening to use their hordes of data to enter financial services.

“The Trade Ledger platform equips these lenders with the same degree of technological proficiency as these massive tech firms, while arming them with the tools needed to meet our booming innovation ecosystem’s need for credit,” concluded Martin McCann.

This is the third year the FinTech Awards have been running, and the FinTech Awards owner, Glen Frost, was particularly impressed with both the quality and quantity of this year’s applications.

Speaking on the night, Glen Frost said: “The 3rd Annual FinTech Awards recognise and reward the innovators and the risk takers. To be recognised by your peers for your innovation and entrepreneurial spirit will sustain you through the tough times, it will motivate you, and it will show your customers, investors and staff, that you’ve got what it takes.

“I congratulate Martin McCann, and his team at Trade Ledger, on winning the Ashurst FinTech Startup of the Year.”

The keynote guest speaker for the evening was the Hon Scott Morrison, MP, Treasurer, who told the crowd that he was relying on the fintech community to ensure the success of his policy on comprehensive credit reporting.

LMI Genworth Remains Under The Gun

We suspect that when Genworth went public a few years ago, they did not necessarily consider the extra scrutiny such a listing warrants, especially in a home lending sector which is now under more pressure. This pressure is reflected in their 1H18 results and is a bellwether for the wider housing sector.  Actually I think they are doing much right, given the market context but its a tough gig.

The Group reported a 2018 statutory interim net profit after tax of $41.9 million, down 52.7% from $88.7 million in the prior corresponding period mainly driven by the adverse impact from the change in earnings curve conducted in 2017 which resulted lower earned premium.

On 1 August 2018, the Directors declared a 100% ordinary franked dividend of 8.0 cents per share totalling $36,817,000 and a 100% franked special dividend for 4.0 cents per share totalling $18,409,000.

New business volume, as measured by New Insurance Written (NIW), decreased 21.4% to $10.3 billion in 1H18 compared with $13.1 billion in 1H17. NIW in 1H18 included $1.1 billion of bulk portfolio business versus $2.1 billion of bulk portfolio business in 1H17. NIW excludes the Company’s excess of loss reinsurance and the new business written via Genworth’s Bermudan entity.

The decline in NIW in 1H18 compared to 1H17 reflects the $1.0 billion reduction in bulk portfolio business and the fact that 1H17 included business written pursuant to an agreement with the Company’s then second largest customer. This agreement terminated in April 2017 and represented $2.5 billion of NIW in 1H17.

Gross Written Premium (GWP) increased 46.4% to $266.8 million in 1H18 (1H17: $182.3 million). This includes the new business written via Genworth’s Bermudan entity and the new Micro Markets LMI business. As disclosed at the time of the Company’s 1Q18 Results announcement Genworth has retained $170.2 million of risk and placed the remainder with a consortium of global reinsurers through its Bermudan entity. Net of the premium to the consortium of global reinsurers, Genworth’s GWP increased 12.0% in 1H18 as a result of this transaction. For reporting purposes this risk is not reflected in NIW. In terms of the traditional LMI business, volumes were down 6% from 1H17 following termination of the Company’s then second largest customer contract in April 2017. This was partially offset by a higher LVR mix which resulted in a higher average price for written premiums.

The expense ratio increased to 32.9% from 25.9% in the prior corresponding period mainly reflecting lower net earned premium in the current period. The reported loss ratio increased from 34.8% at 30 June 2017 to 53.3% at 30 June 2018 reflecting primarily lower net earned premium in the current period.

The Delinquency Rate (number of delinquencies divided by policies in force but excluding excess of loss insurance) increased from 0.51% in 1H17 to 0.54% in 1H18. This was driven by two factors. Firstly, there was a decrease in the policies in force following completion of the Lapsed Policy Initiative. The second (lesser) factor impacting the delinquency rate has been an increase in the number of delinquencies in Western Australia, New South Wales and to a lesser extent South Australia. This was partially offset by a decrease in delinquencies in Victoria and Queensland. New delinquencies were down in the half (1H18: 5,565 versus 1H17: 5,997). Delinquencies in mining areas are showing signs of improving. In non-mining regions there are indications of a softening in cure rates. These are being closely monitored to ascertain any developing adverse trends.  WA continues as primary contributor to deterioration in 2013-14 vintages due to ongoing economic and housing market challenges following the downturn in the mining sector.

The market capitalisation of the Company as at 30 June 2018 was $1.2 billion based on the closing share price of $2.57.

The Group’s regulatory capital at 30 June 2018 was 1.90 times the Prescribed Capital Amount (“PCA”) and the Common Equity Tier 1 (“CET1”) ratio was 1.71. Regulatory capital exceeds the Group’s targets and reflected a strong capital position.

In early 2017 Genworth commenced a Strategic Program of Work designed to enable it to effectively compete in a market of evolving borrower and lender expectations, resulting from technological advances and regulatory change.

As part of its Strategic Program of Work the Company announced in 1Q18 that it had entered into agreements with lender customers to provide new product offerings that are complementary to its traditional lenders mortgage insurance (LMI). These new offerings included a bespoke risk management solution via a newly established Bermudan insurance entity, micro markets LMI and excess of loss cover.

In 2Q18 the Company continued the momentum of its Strategic Program of Work. Over the past 12 months Genworth has worked with a technology partner to develop a new automated underwriting decision engine (Auto Decision Engine) which will be launched later this year. This initiative will deliver operational efficiencies and provide the business with greater underwriting risk management insights.

Also of note is Genworth’s investment in Tictoc Online Pty Limited (Tic:Toc). Tic:Toc is a fintech in the online origination space. In addition to a small equity stake in Tic:Toc, Genworth has been appointed the exclusive provider of LMI on Tic:Toc’s digital loan platform. Tic:Toc’s digital loan platform operates both as a direct-to-consumer platform and as a partner platform.

Building Approvals A Little Stronger In June 2018

The number of dwellings approved in Australia rose by 0.1 per cent in June 2018 in trend terms, according to data released by the Australian Bureau of Statistics (ABS) today.  We suspect the MSM will fixate on the less reliable seasonal results, which show a significant bounce in approvals.

Among the states and territories, dwelling approvals rose in June in the Australian Capital Territory (5.8 per cent), South Australia (5.6 per cent), Northern Territory (4.8 per cent), Tasmania (2.2 per cent), Western Australia (1.7 per cent) and New South Wales (0.2 per cent) in trend terms.

Dwelling approvals fell in trend terms in Queensland (1.6 per cent) and Victoria (1.2 per cent).

In trend terms, approvals for private sector houses fell 0.6 per cent in June. Private sector house approvals fell in Western Australia (1.4 per cent), Victoria (0.9 per cent) and New South Wales (0.8 per cent), but rose in South Australia (0.4 per cent). Private house approvals were flat in Queensland.

In seasonally adjusted terms, total dwellings rose by 6.4 per cent in June, driven by a 7.2 per cent increase in private dwellings excluding houses. Private houses rose 5.0 per cent in seasonally adjusted terms.

The value of total building approved fell 0.8 per cent in June, in trend terms, and has fallen for seven months. The value of residential building rose 0.3 per cent, while non-residential building fell 2.9 per cent.

“The rise was driven by private dwellings excluding houses, which increased by 1.1 per cent in June.” said Justin Lokhorst, Director of Construction Statistics at the ABS. “This was offset by a 0.6 per cent fall in private sector houses.”

Investment Lending Slides, But Overall Credit Higher

The RBA released their credit aggregates to June 2018 today.  Overall credit grew 0.3% in the month to $2.84 trillion, up $9.7 billion. to a new record.

Within that, owner occupied housing lending rose 0.6% or $6.6 billion to $1.18 trillion, while investment lending fell $800 million, down 0.1% in seasonally adjusted terms, or rose $1 billion, up 0.2% in original terms. (I have no idea what adjustments the RBA makes, its not disclosed!).

Investment lending fell to 33.5% of the portfolio. Total lending for housing is a new record $1.77 trillion, and remember this is at a time when housing debt to income is knocking on the 200 door, and we are one of the most in debt nations on the planet.  Least we forget, loans need to be repaid, eventually!

Business lending in seasonal terms rose 0.4%, up $4.1 billion to $921 billion, and fell to 32.2% of all lending – we see a continued fall in the proportion of lending to business, as opposed for housing, which is not good.

Personal credit rose $600 million, up 0.4% in original terms or fell $300 million in seasonally adjusted terms down 0.2%.

The monthly seasonally adjusted numbers highlight the slide in investor lending, and the stronger owner occupied lending.

Finally, we also estimate the growth in on-bank lending, by taking the original RBA data, and comparing this with the ADI data from APRA also out today.

In essence, the relative share of home lending going to the non-banks is rising, to around 7% of all loans, and the bulk of the loans being written are for owner occupied borrowers.

A caveat here, as the non-bank segment of the data will always be a bit off, because there is less timely data captured from this small, but growing part of the market. Something which APRA needs to address.

So more of the old same old, same old, housing lending still growing way above inflation and wages, forcing housing debt higher, at the expense of business investment.

We have not fundamentally addressed the credit elephant in the room. Despite all the noise.

Perhaps the regulators would like to tell us, how much debt is too much? We clearly have not hit their pain threshold yet, despite the rising financial stress in many households.