Mortgage stress appearing

S&P just cut the credit ratings of 23 Australian financial institutions over property market risk

S&P moves to reduce credit ratings

 

another brick in the wall

 

Just found out WBC is among these 23 institutions

 

Interesting to see a pattern with the majority being credit unions/ex-credit unions. I wonder if the correlation is due to their small overall books with recent upticks meaning they're exposed to higher overall book LVR's or if there are different lending practices leading to these results

 

Is lvr still 90% under medical profile and interest only

 

That sounds likely to me. Some of the banks on that list seem like quite small, niche banks too.

 

Random question. I'm assuming you're talking about medico LMI waivers @ 90% LVR. Some lenders are still doing it at this time (but wont for not much longer), others are now only giving the waiver to 90% if the debt is P&I. If you're wanting to use this niche you better move fast.

 

From what I observe, a recession could be on the way in the next 2 years, I seen a lot of small signs lead me to believe it is slowly creeping up

 

Conflicting data here, indicating mortgage arrears are in decline over the last 2 months, although slightly higher year on year.

Whats interesting is that non bank lenders (you know, those ones that many brokers failed to support post GFC because they were not "safe", leading us to the current oligopoly ) have MUCH lower arrears than the majors ...

Mortgage arrears decline once again

 

Based on the budget and the current political mood, seems like both parties will be splashing on massive infrastructure projects so construction boom easing should be pretty offset by that. Also, manufacturing numbers has been pulling up very slowly.

What's those small signs you mention if you don't mind sharing?

 

Almost all retail sale figure are a recession like, car sale down, basically, anything to do with consumer spending is backwards, plenty of retailers went belly up.

I read a lot of AFR so business wise it not pretty for a lot of them.
When people don't spend that usually spell trouble is coming.

no good without example:
Oroton has it worse year in decades
Topshop went belly up
RCG foot wear business people multiple downgrades
all list ASX vehicles dealer went backwards in sales
Sigma - maker of drugs and healthcare products has a small profit downgrade but that also to do with their contract dispute but they did sneak in little notes, said comsumer spending is soft

and on and on it go, I been reading AFR for decades and this is the first year I have seen so many ominous sign.

The reality is there bound to be a recession, you cant have 25+ years of growth without some sort of slow down, when? no one knows but that just my opinion about the 2 years frame

 

As an observation from someone on the ground, I am seeing an increasing number of mortgagee sales, often on nice houses too.

I have had 3 settle for clients in past month... they do provide good buying if the agent and lender are suitably amenable to a lower offer.

 

Are you seeing these in Adelaide?

 

Yes, this was on the 7:30 report.

While I agree there are small signs, it seems that S&P has taken to the non-Big4 lenders with a mallet. We all know that many of those lenders conduct their business in a more ethical and efficient way than the Big4 and in many cases, their books are not small. Either S&P is incredibly obtuse or they believe they have more information about an on-coming recession than everyone else. Let's hope it's the former.
Another possibility is that they're reacting to our govt doing what we've all wanted for decades - building infrastructure, providing jobs away from the capital cities, creating easier access for trade.

 

Yes

 

Shares signal major economic slowdown
There's a good chance the Australian sharemarket is telling us something about the economy. And it's not good.

 

sounds like housing costs are taking priority and a higher portion of the disposable income pie for households. Can't see how inflation or interest rates will change much unless something changes with the property market, in the meantime household money continues to be 'stuck' in unproductive assets like real estate.
obvs not great for economy in long term

 

if that's the case then why did they downgrade the smaller banks and not the big banks last week even though many of the smaller lenders have better accounting sheets than the big four?

 

Seems thta your guess is as good as mine.