Banks accused of squeezing households on mortgage rates
At least, that's what The Australian is saying today in its story showing the major banks have withheld the equivalent of eight official interest rate cuts since the GFC - making average mortgage rates four points higher than they could be.
It's a good headline, but an unrealistic expectation. The counterargument is that mortgage interest rates are based on many other factors beyond the official cash rate. But that didn't stop an unnamed bank analyst telling The Australian that the withholding of potential cuts is "a giant tax on households."
Whatever their reasons, the big banks are losing business to more aggressively competitive, smaller lenders. Data released by Australian Financial Group show home loan lodgements in Q2 2019 rose 12 per cent compared to Q1; a record high of 42 per cent are going to non-major lenders, who are also picking up one in three first home buyer applications.
This announcement coincided with the release of a CBA report showing that despite the recent price slump, Australia's housing costs remain high by international standards. It suggests we're yet to reach a point where less people are priced out of the housing market, and that situation will worsen as a recovery continues.
Another report released yesterday was the NAB Business Conditions Index for June, showing a 3.4 per cent bounce in business conditions, driven largely by an improvement in employment and trading. Profitability remains low, and the retail sector continues to be the weakest across all industries. It also showed that the post-election confidence bubble has deflated among corporates, with business confidence below trend.
Bye-bye buy: where it's cheaper to rent
Data released by Domain Group yesterday comparing rental and mortgage repayments nationally maps parts of Australia's major cities where it's cheaper to rent. In Sydney, it's pretty much cheaper week-to-week to rent a house or apartment, while Melbourne is much more mortgage-friendly. In Brisbane, there are 45 suburbs across the city where rents are higher than a typical mortgage.
(Your job for this morning: if you're a Domain Group client, get on the blower and ask for a copy of the report, which is not released publicly.)
Another Sydney apartment evacuation
NSW building industry minister, Kevin Anderson will be grinding his teeth this morning. The Herald has revealed this morning that residents of a 30 loft-style apartment project in Zetland were evacuated towards the end of last year over water and fire safety defects - before the Opal Tower evacuation. Eight months later, the Zetland residents are still waiting to be allowed back.
This will put pressure on minister Anderson after he said last month that Opal Tower and Mascot Towers were isolated incidents, and there is no need to rush industry reforms. The government currently has proposed reforms in consultation.