Knobby22
Mmmmmm 2nd breakfast
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- 13 October 2004
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Uncle Festivus said:
It will be interesting when interest rates rise repeatedly later this year and early next year.
Uncle Festivus said:Rates 'biting into mortgage payments'
March 8, 2007 - 3:14PM
A growing number of Australian households are falling behind in their mortgage payments as record indebtedness, rising interest rates and high petrol prices continue to bite.
Moody's Investors Services has found that 30-day delinquency levels in the fourth quarter of 2006 were on the rise, particularly in December, when seasonal factors such as Christmas spending depleted borrowers' pockets.........
http://www.smh.com.au/articles/2007/03/08/1173166869633.html?sssdmh=dm16.250112
It is also worth remembering that many non-deposit holding Bank lenders are completely securitised, ie all loans are approved under an LMI contract (although below 80% LVR the lender covers the cost of LMI).lamborghini said:They are not competetive against all 20 other (bank and non bank lenders on our panel). They do have the branches though, commonwealth has the most, but they look at these as expenses! These banks still follow the UK system of banking.
ING,CitiBank,RAMS and Superfunds - Don't have any branches (expenses) but are getting more market share! They follow the US system of banking. They use Brokers and F/Planners 100% - no branches or bank employees.
The default auction rate comparing Dec 05 & Dec 06 tripled in Sydney, and as a consequence LMI providers (there are only two currently operating in Australia) have tightened their guidelines.Uncle Festivus said:Rates 'biting into mortgage payments'
March 8, 2007 - 3:14PM
A growing number of Australian households are falling behind in their mortgage payments as record indebtedness, rising interest rates and high petrol prices continue to bite.
Moody's Investors Services has found that 30-day delinquency levels in the fourth quarter of 2006 were on the rise, particularly in December, when seasonal factors such as Christmas spending depleted borrowers' pockets.........
http://www.smh.com.au/articles/2007/03/08/1173166869633.html?sssdmh=dm16.250112
The Australian banks' safe haven status is increasingly coming under pressure amidst what only can be described as ongoing freezing temperatures on global debt and credit markets.The latest victim could well be Australia's fifth largest bank, St George (SGB), with analysis by Deutsche Bank analysts revealing management's 10% EPS growth target for FY08 should now be considered under threat.
http://www.sharecafe.com.au/fnarena_news.asp?a=AV&ai=5827
Reserve Bank of Australia Pledges Funds to Banks
Sept. 6 (Bloomberg) -- Australia's central bank said it will buy debt backed by home loans, after the rout in the U.S. subprime market dried up demand for asset-backed securities and drove up money market rates.
The interest-rate banks charge each other plunged 15 basis points from an 11-year high of 7.06 percent yesterday after the Reserve Bank of Australia said in a statement today it will buy top-rated bonds backed by mortgages. Asset-backed commercial paper and bank bills will also be eligible for repurchase agreements used to add cash to the financial system.
The move increases funds available to banks and supports the market for asset-backed debt in Australia, where credit markets have been roiled by losses related to debt backed by loans to U.S. homeowners. National Australia Bank Ltd. yesterday said an affiliate had been unable to refinance A$6 billion ($4.9 billion) of loans. The nation's lenders are being hurt because of their dependence on global capital markets for funds, Moody's Investors Service said in a report.
``This will put a bit of calm back into the markets and improve the liquidity situation,'' said Mark Bayley director of credit and structuring at ABN Amro Holding NV in Sydney.
The Reserve Bank yesterday left the overnight cash rate unchanged at an 11-year high of 6.5 percent. Central banks typically buy government securities in so-called repurchase agreements, or repos, for a set period to bring money market rates closer to their targets. At maturity, the securities and the cash are returned to the central bank.
`Helps the Markets'
``Obvious concerns and volatility in the credit markets'' triggered the central bank's decision to widen debt buying, said John Broadbent, head of domestic markets department at the Reserve Bank in Sydney. ``We need to make sure what we are dealing in, helps the markets.''
National Australia Bank, the nation's largest, moved A$6 billion of loans onto its balance sheet after the unit holding some assets was unable to refinance in the short-term debt market, the Melbourne-based bank said in a presentation to investors in London yesterday.
Australia & New Zealand Banking Group Ltd., the third- largest, said Aug. 30 its margins have narrowed as much as 25 basis points, which may ``put upward pressure on mortgage rates.'' A basis point is 0.01 percentage point.
Bank of Japan
The Bank of Japan refrained from adjusting funds in the financial system today. In Japan, the rate for overnight call loans between commercial banks and other financial institutions in Japan rose to 0.49 percent as of 12:13 p.m. in Tokyo from 0.42 percent yesterday, according to brokerage company Tokyo Tanshi Co. That's still below the BOJ's target of 0.5 percent.
Companies in the Asia-Pacific region are not affected by the credit market rout, according to a report by Moody's yesterday. The region's borrowers will not face a shortage of funding because they can continue to rely on bank lending and domestic bond markets, the report said.
``Moody's is seeing no evidence so far of a reduction in the ability or willingness of the banking sector in Asia to lend to corporates,'' Sydney-based Brian Cahill and Hong Kong-based Clara Lau, wrote in the report.
Companies in Australia may face rising borrowing costs because they actively tap commercial papers for their funding and banks rely more on the capital market than other Asian lenders, which depend more on bank deposits, the report said.
Yields on three-month U.S. asset-backed commercial paper rose on Sept. 4 to 6.16 percent, the highest in more than six years, according to data compiled by Bloomberg.
Funding Costs
The three-month London interbank offered rate for dollars, or Libor, increased to 5.72 percent, the highest since January 2001, from 5.36 percent at the end of July, the British Bankers' Association said yesterday.
The spread for three-month Australian dollar Libor over the RBA's benchmark rate touched 56 basis points yesterday, the widest since February 2000. It has averaged 12 basis points more than the key rate in the past five years.
Yields on three-month U.S. asset-backed commercial paper rose on Sept. 4 to 6.16 percent, the highest in more than six years, according to data compiled by Bloomberg.
http://www.theaustralian.news.com.au/story/0,25197,23338906-601,00.htmlAUSTRALIA'S financial institutions have lent billions of dollars to home buyers who were not subject to basic credit checks and had a history of defaults, putting them in the "sub-prime" category that continues to terrorise world financial markets.
The revelation, contained in research conducted by Dun & Bradstreet exclusively for The Weekend Australian, will add to investor fears about Australian banks' exposure to the global turmoil caused by the collapse of the sub-prime mortgage market in the US.
Shares in the Big Four banks, which have already lost $100billion in value since their highs last year, yesterday led the stock market sharply lower. The benchmark S&P/ASX 200 index slumped 3 per cent after concerns about the international credit crisis again stalked Wall Street.
The value of the Australian stock market has now shrunk $400 billion - or 25 per cent - since the sub-prime problems were first revealed in mid-last year.
Hello,
A question for those that follow banks - do oz banks have any exposure to bad loans that could upset the balance sheet, for example as in the US sub-primes and British markets? Are the banks bad and/or dodgy loans portfolio published anywhere. If so, which bank is the most exposed?
do they need subprime? when you have Allco, Centro, ABS, MFS, City Pacific and many more going belly up
I only hope that the Government does not try and bail a Bank out. The U.K. now have over A$230 billion at stake in the bail out of Northern Rock and two more Banks are looking shakey.
I saw a programme that showed the Icelandic Bank as one of high risk Banks that are offering very high interest rates round the world.
If a Bank goes down then the pieces are picked up cheaply by other Banks, and bankruptcy ends the debt problems.
Those with money invested in a foreign Bank may find the safeguards far less than with an Aussie Bank or Institution.
So the apparent relentless sell down of Aussie banks has not been without reason as it appears.....
http://www.theaustralian.news.com.au/story/0,25197,23338906-601,00.html
Bankruptcy might well end the debt problems for the collapsing bank, but what about the many, many creditors and businesses who would be relying on that failing bank to pay THEM back to avoid their own liquidity crisis or bankruptcy? There would be a BIG ongoing domino effect of related creditor's business closures/bankruptcies if a medium to large bank were to go under - hence the seemingly over-the-top efforts by governments to forestall such a dire event.
AJ
Fair comment Aussiejeff, and even Dr Marc Faber, who went as far as to suggest that the US Citibank may be in trouble. Did say the Federal Government would have to bail them out.
What happens if three or four Banks and Institutions go under in Australia: Does the Federal Government risk $500 billion to bail them out?
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