Big banks team up to reduce pressure on house prices… Australia emerging as top P2P market… BoQ boost lending practices...
Lending and price relief en route as big banks team up
The big banks will have to raise $18 billion of new capital if the Australian Prudential Regulation Authority implements a key recommendation of the financial system inquiry, which could curb the rate of growth in home lending and reduce pressure on house prices, ratings agency Standard & Poor's says.
According to an article in the Sydney Morning Herald, the report highlights that if APRA required the big banks to use higher average "risk weightings" for home lending, this "would result in a higher level of capital held against mortgage loans across the entire industry, which would be positive for the Australian banking system with inflation absorbing a lot of concern.
S&P said the higher mortgage risk weighting could result in the big banks having to lift the standard variable rate (SVR) on a mortgage by 23 basis points (0.23 percentage points) to maintain current return on equity, according to the article.
"Under a scenario such as this, the major bank would have to reconsider its willingness and ability to grow its mortgage book at the current high rate of growth, based on the competitive pricing they have enjoyed to date."
Australia emerging as top P2P market
New research by Morgan Stanley predicts that the value of loans made through peer-to-peer lending (P2P) platforms in Australia will increase to $22 billion in the next five years, according to an article from mozo.com.au.
The report ranked Australia as one of the fastest emerging P2P markets, alongside China and the United Kingdom, with P2P lending to Aussie consumers expected to comprise six per cent of total consumer lending at $10.4 billion by 2020.
It was also predicted P2P lending to small businesses would grow, at a faster rate than consumer credit, to $11.4 billion over the same period, according to the article. P2P lenders provide technology platforms that match individual investors directly with potential borrowers that meet the eligibility requirements.
“We believe there is an opportunity for P2P lending to establish a meaningful presence in Australia due to high online/mobile banking penetration, growing margins and high returns in unsecured lending and a highly concentrated banking industry focused on mortgages and deposits rather than on consumer unsecured lending,” said Morgan Stanley in a recent paper.
BoQ boost lending practices
The Bank of Queensland (BoQ) has moved to boost its lending practices after the Australian Securities and Investments Commission (ASIC) found they were not consistent with the National Credit Act, according to an article from Money Management.
ASIC reported it was concerned that BoQ was using a benchmark figure, the Henderson Poverty Index (HPI), to estimate the living expenses of consumers applying for home loans, instead of asking them about their actual expenses.
"In ASIC's view, the lack of enquiry about actual expenses, and sole reliance on HPI, was not consistent with responsible lending obligations imposed by the National Credit Act," the regulator said.
"Bank of Queensland has updated its home loan application forms to obtain more information about a customer's living expenses.
The big banks will have to raise $18 billion of new capital if the Australian Prudential Regulation Authority implements a key recommendation of the financial system inquiry, which could curb the rate of growth in home lending and reduce pressure on house prices, ratings agency Standard & Poor's says.
According to an article in the Sydney Morning Herald, the report highlights that if APRA required the big banks to use higher average "risk weightings" for home lending, this "would result in a higher level of capital held against mortgage loans across the entire industry, which would be positive for the Australian banking system with inflation absorbing a lot of concern.
S&P said the higher mortgage risk weighting could result in the big banks having to lift the standard variable rate (SVR) on a mortgage by 23 basis points (0.23 percentage points) to maintain current return on equity, according to the article.
"Under a scenario such as this, the major bank would have to reconsider its willingness and ability to grow its mortgage book at the current high rate of growth, based on the competitive pricing they have enjoyed to date."
Australia emerging as top P2P market
New research by Morgan Stanley predicts that the value of loans made through peer-to-peer lending (P2P) platforms in Australia will increase to $22 billion in the next five years, according to an article from mozo.com.au.
The report ranked Australia as one of the fastest emerging P2P markets, alongside China and the United Kingdom, with P2P lending to Aussie consumers expected to comprise six per cent of total consumer lending at $10.4 billion by 2020.
It was also predicted P2P lending to small businesses would grow, at a faster rate than consumer credit, to $11.4 billion over the same period, according to the article. P2P lenders provide technology platforms that match individual investors directly with potential borrowers that meet the eligibility requirements.
“We believe there is an opportunity for P2P lending to establish a meaningful presence in Australia due to high online/mobile banking penetration, growing margins and high returns in unsecured lending and a highly concentrated banking industry focused on mortgages and deposits rather than on consumer unsecured lending,” said Morgan Stanley in a recent paper.
BoQ boost lending practices
The Bank of Queensland (BoQ) has moved to boost its lending practices after the Australian Securities and Investments Commission (ASIC) found they were not consistent with the National Credit Act, according to an article from Money Management.
ASIC reported it was concerned that BoQ was using a benchmark figure, the Henderson Poverty Index (HPI), to estimate the living expenses of consumers applying for home loans, instead of asking them about their actual expenses.
"In ASIC's view, the lack of enquiry about actual expenses, and sole reliance on HPI, was not consistent with responsible lending obligations imposed by the National Credit Act," the regulator said.
"Bank of Queensland has updated its home loan application forms to obtain more information about a customer's living expenses.
