Analysts believe banks can withstand coronavirus shock but high debt levels leave few buffers
4 years, 11 months ago

Analysts believe banks can withstand coronavirus shock but high debt levels leave few buffers

ABC  

It's the sharpest and swiftest economic downturn anyone alive has seen — a sudden shutdown of large swathes of the economy, with a property price crash looming, businesses collapsing and jobless rates forecast to hit levels akin to the Great Depression. Key points: Analyst Brian Johnson says Australian banks are holding more cash than they used to The Reserve Bank will assist banks with liquidity if necessary and is offering at least $90 billion to support lending to small and medium businesses Economist Gerard Minack says authorities and the RBA will backstop banks, meaning they won't go out of business All bearing down on a society that, outside of Switzerland, has the highest household debt levels in the world. "In January and February, the cost of funding for the Australian banks had gone down and the Australian banks exploited that," Mr Johnson said. "What we can see around the world is the transfer of risk from the private sector banks to the public sector," Mr Johnson said. Mr Minack also said a sharp decline in house prices could create a "powerful wealth effect" which may discourage people from spending even after the immediate economic shock passes.

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History of this topic

ASX closes higher, Star Casino announces bailout, Qantas engineers pursue industrial action
5 months, 3 weeks ago

ASX closes higher, Star Casino announces bailout, Qantas engineers pursue industrial action

ABC  

The Reserve Bank has released its latest bi-annual financial stability review, which looks at the current health of Australia's financial system. In its latest Financial Stability Review released today, the RBA said the number of borrowers whose mortgage repayments and essential living costs exceeded their pay packets has remained at 5%. While borrowers are historically “more resilient” to rising unemployment …

Finance guru Mark Bouris makes worrying admission about Australia
7 months, 2 weeks ago

Finance guru Mark Bouris makes worrying admission about Australia

Daily Mail  

Finance guru Mark Bouris has claimed that Australia has been in a recession for the past 18 months with the standard of living the worst its been in two years. Finance guru Mark Bouris has claimed that Australia has been in a recession for the past 18 months The cash rate is currently at a 12 year high of 4.35 …

RBA Financial Stability Review says Australia's banks safe even as up to 85,000 borrowers risk running out of cash
11 months, 3 weeks ago

RBA Financial Stability Review says Australia's banks safe even as up to 85,000 borrowers risk running out of cash

ABC  

In short: Around 5 per cent of mortgage borrowers currently spend more than they earn on essentials and their mortgage, and more than 2 per cent could run out of savings by the end of next year. Around 5 per cent of mortgage borrowers currently spend more than they earn on essentials and their mortgage, and more than 2 per …

Did the Reserve Bank hit the brakes too hard? Why Australia's economy is heading into reverse
1 year ago

Did the Reserve Bank hit the brakes too hard? Why Australia's economy is heading into reverse

ABC  

The softening-up process is already underway. There's now every possibility the GDP numbers could tip negative, giving the first real indication that Australia's economy is shrinking under the weight of 13 interest rate hikes in quick succession. The RBA lifted the cash rate to 4.35 per cent last November, but it hasn't fully flowed through to the whole economy. Prepare …

Australia's economic crisis will be front and centre as 2023 ends. But whether 2024 will be more prosperous remains to be seen
1 year, 3 months ago

Australia's economic crisis will be front and centre as 2023 ends. But whether 2024 will be more prosperous remains to be seen

ABC  

It's been a year, hasn't it? That inflation struggle will be front and centre as this year ends and the new year begins, keeping the Reserve Bank back in the national economic driver's seat for another year. Unemployment rises despite another surprise job creation surge Photo shows A female bartender smiles at a colleague cutting lemons as she shakes up …

RBA finds 5pc of mortgage borrowers spend more than they earn, but not worried about default risks
1 year, 3 months ago

RBA finds 5pc of mortgage borrowers spend more than they earn, but not worried about default risks

ABC  

The Reserve Bank remains confident that very few borrowers — less than 2 per cent — are at serious risk of defaulting on their mortgages. Key points: The RBA's head of financial stability says less than 2 per cent of borrowers are at any real risk of default over the next six months The bank finds 95 per cent of …

A rising number of households on the cusp of financial stress, but RBA says banking system isn't at risk
1 year, 5 months ago

A rising number of households on the cusp of financial stress, but RBA says banking system isn't at risk

ABC  

Australian homes and businesses are vulnerable to financial stability risks as rising inflation and interest rates continue to pressure the global economy. Key points: Australia's financial system is well-placed to deal with global economic shocks The share of households falling behind on their mortgage payments has picked up a little Despite rising rates, the vast majority of households are servicing …

RBA delivers 'massive' interest rate hit to millions of Australians already struggling with overwhelming cost pressures
1 year, 10 months ago

RBA delivers 'massive' interest rate hit to millions of Australians already struggling with overwhelming cost pressures

ABC  

It was designed to shock, and it did just that. On Tuesday, the Reserve Bank of Australia increased its cash rate target — after a month's pause — by 0.25 percentage points, to 3.85 per cent. "Don't forget that the RBA estimates that 15 per cent of variable rate borrowers will move into negative cash flow by year's end if …

Banking turmoil has potential to trigger financial crisis, warns ANZ Banking Group CEO
1 year, 11 months ago

Banking turmoil has potential to trigger financial crisis, warns ANZ Banking Group CEO

Firstpost  

London: Australia and New Zealand Banking Group’s CEO said on Monday the latest turmoil in the global banking system had the potential to trigger a financial crisis though it was early to predict it could bring one similar to that in 2008. But he said it was premature to assume the current condition could result in “another GFC”, referring to …

Federal Reserve hikes interest rates but gives RBA room to pause
1 year, 11 months ago

Federal Reserve hikes interest rates but gives RBA room to pause

ABC  

Never waste a crisis. "We did consider that in the days running up to the meeting," Powell told reporters in a press conference after today's rate rise decision, referring to a period where the banking crisis threatened to spiral out of control. But Powell was keen to maintain a link between the US banking crisis and inflation when explaining why …

Risky business: What next for a troubled banking world after the collapse of two US banks?
2 years ago

Risky business: What next for a troubled banking world after the collapse of two US banks?

ABC  

The doomsday calls have been coming thick and fast during the past fortnight, replete with predictions of a global financial crisis re-run. And while the European Central Bank shrugged aside the warnings and pushed ahead with a super-sized rate rise last Thursday — for fear of appearing concerned about the week's events — there'll be plenty of questions in central …

Reserve Bank of Australia raises interest rates to 11-year high, opens the door to a pause
2 years ago

Reserve Bank of Australia raises interest rates to 11-year high, opens the door to a pause

ABC  

The Reserve Bank of Australia has raised interest rates for the 10th consecutive meeting, taking the cash rate target to 3.6 per cent. Key points: The cash rate target of 3.6 per cent is the highest since May 2012 The 0.25 of a percentage point rate rise will add around $77 a month to repayments on a $500,000 mortgage RBA …

Has Australia's housing boom hit the end of the road and could it take the economy down with it?
2 years, 2 months ago

Has Australia's housing boom hit the end of the road and could it take the economy down with it?

ABC  

While Argentina may have dispatched Australia to go on and win football's World Cup, there is one kicking contest where we are undisputed world leaders – that's economic can kicking. Many fixed mortgage rates were below 2 per cent, some for terms as long as four years, and the Reserve Bank governor had said repeatedly that rates were unlikely to …

A fork in the road for mortgage borrowers: Spend cash buffers to meet higher repayments or cut back on spending?
2 years, 3 months ago

A fork in the road for mortgage borrowers: Spend cash buffers to meet higher repayments or cut back on spending?

ABC  

Money is being re-directed away from millions of Australians' bank accounts. It's that moment when you discover the majority of the Reserve Bank's interest rate increased have now been applied to your home loan and extracted from your bank account. According to RateCity, if you factor in the entire 2.75 per cent Reserve Bank rate increases, the total extra monthly …

RBA deputy governor Michele Bullock says outlook for global economy is 'quite worrying'
2 years, 6 months ago

RBA deputy governor Michele Bullock says outlook for global economy is 'quite worrying'

ABC  

The outlook for the global economy is "quite worrying" and it has implications for Australia, a Reserve Bank official has warned. Key points: The RBA says its emergency bond-buying program broadly achieved its aims Deputy governor Michele Bullock says there are problems in the global economy that could threaten Australia's recovery The RBA's ability to create money supported the economy …

How does corporate Australia expect households to cope with cost of living — and why we should pay attention
2 years, 7 months ago

How does corporate Australia expect households to cope with cost of living — and why we should pay attention

ABC  

Quietly, and without too much fanfare, the Australian share market has pulled itself out of a technical correction. Some companies have already reported and from today we'll get profit updates and forward guidance from the Commonwealth Bank, Macquarie Group and Telstra — some of the country's biggest employers. Yesterday the National Australia Bank revealed the outlook for its credit quality …

Interest rates are rising: Is the RBA at fault for allowing Australians to take on too much debt?
2 years, 8 months ago

Interest rates are rising: Is the RBA at fault for allowing Australians to take on too much debt?

ABC  

Can we blame Australians for being a little confused about the Reserve Bank's messaging on interest rates? Towards the end of 2020 and for nearly all of last year, Reserve Bank Governor Philip Lowe said interest rates would not likely rise until 2024. In November and December 2020, Dr Lowe said in the bank's monetary policy decision statement that the …

Why Australians needn't panic about possible interest rate rises as RBA ponders next step
3 years, 1 month ago

Why Australians needn't panic about possible interest rate rises as RBA ponders next step

ABC  

They say talk is cheap, although for the past few years, it hasn't been quite as cheap as cash. Central banks lost control a year ago It's an easy mistake to make; to believe central banks are all-powerful and dictate the direction and size of interest rate movements. A year ago, the 10-year government bond rate – often called the …

How the RBA allowed Australia to become a servant to property prices in a $9 trillion market
3 years, 4 months ago

How the RBA allowed Australia to become a servant to property prices in a $9 trillion market

ABC  

Size, it seems, really does matter. The inflation bogey comes back to bite Most people mistakenly believe that the Reserve Bank sets interest rates. Last Friday, after a higher-than-expected inflation spurt in the September quarter, money markets went to war with the RBA, steam rolling its efforts to keep interest rates at a whisker above zero. RBA governor Phillip Lowe …

RBA keeps interest rates at record low but will watch home lending 'carefully'; ASX climbs
3 years, 11 months ago

RBA keeps interest rates at record low but will watch home lending 'carefully'; ASX climbs

ABC  

The Reserve Bank has kept interest rates at a record low and will continue its programs to pump cheap money into the banking system and economy, but has said it is watching surging home lending "carefully". "The unemployment rate fell to 5.8 per cent in February and the number of people with a job has returned to the pre-pandemic level," …

Why the Reserve Bank and the federal government don't see eye to eye on Australia's coronavirus recovery
4 years ago

Why the Reserve Bank and the federal government don't see eye to eye on Australia's coronavirus recovery

ABC  

These are unusual times. As the federal government is adamant that stimulus needs to be wound back, to allow the private sector to take over in the recovery, the Reserve Bank is doubling down, arguing that it will be years before Australia can wean itself off the emergency interest rates that have sunk to zero. Responsible lending not responsible Ever …

Fears of a debt disaster as property market runs hot and changes to safe lending laws loom
4 years ago

Fears of a debt disaster as property market runs hot and changes to safe lending laws loom

ABC  

Jacob had big dreams before the global financial crisis. The Greens said the bill was "designed to let the banks get on with writing loans as big as they possibly can, whether it's good for people or not". "The banks have reduced what they were assessing loans at — in 2018 it was closer to 8 per cent, but now …

The Government wants to make it easier for you to get a mortgage amid the coronavirus recession — but there's a catch
4 years, 5 months ago

The Government wants to make it easier for you to get a mortgage amid the coronavirus recession — but there's a catch

ABC  

It will soon be easier for Australians to take out mortgages and refinance their home loans while small businesses will be able to access more money under Federal Government plans to change credit laws, to mitigate the effects of the COVID-19 pandemic. Key points: The Government says the current credit laws are outdated, particularly during the COVID-19 crisis The Government …

Commonwealth Bank of Australia impaired loan expenses double because of coronavirus crisis
4 years, 7 months ago

Commonwealth Bank of Australia impaired loan expenses double because of coronavirus crisis

Daily Mail  

The fragility of Australia's economy has been laid bare as the biggest home lender revealed the cost of troubled loans had doubled because of the coronavirus recession. The Commonwealth Bank's rate of troubled home loans has doubled as the coronavirus recession hits the ability of younger borrowers to repay their mortgages The major banks in March offered struggling borrowers six-month …

RBA highlights risk of deeper coronavirus recession, but the Government can avert it
4 years, 7 months ago

RBA highlights risk of deeper coronavirus recession, but the Government can avert it

ABC  

In the helter-skelter world of news, it's often hard to remember what you covered last week. It turns out Australia didn't sink as deeply into this bog as the RBA had originally feared — rather than the 8 per cent fall forecast in early May, the bank now expects Australia's economy to have shrunk just 6 per cent over the …

Debt and deficit go out the window as the reality of the coronavirus crisis hits home
4 years, 7 months ago

Debt and deficit go out the window as the reality of the coronavirus crisis hits home

ABC  

When will it finally sink in? As Treasurer Josh Frydenberg and Finance Minister Matthias Cormann grimly fronted a media pack in Canberra, fresh after releasing Treasury's latest tally of COVID-19's financial toll, they were peppered with endless questions about how we will ever dig ourselves out of debt after all this Federal Government largesse. Debt, debt and more debt Having …

RBA boss Philip Lowe says Australia's economy has 'turned the corner', but Government has more to do
4 years, 8 months ago

RBA boss Philip Lowe says Australia's economy has 'turned the corner', but Government has more to do

ABC  

The Reserve Bank governor says Australia's economy has passed its low point but faces a "bumpy path ahead", with the Federal Government best placed to support the recovery. Key points: Philip Lowe says the jobs market appears to have reached its trough, but there will be "bumps" as previously resilient sectors run out of work Government borrowing costs are the …

Coronavirus crisis heightens fears bank deposits could be wiped out under 'ambiguous' laws
4 years, 8 months ago

Coronavirus crisis heightens fears bank deposits could be wiped out under 'ambiguous' laws

ABC  

Imagine you woke up one day to find your bank account had been wiped out. This legislation gave APRA the power to allow a bail-in financial instrument known as "hybrid securities", a financial instrument described at the time by former ASIC chairman Greg Medcraft as "a ticking time bomb". It said it did "not consider that the bill would allow …

Australian economy outperforming, but coronavirus 'shadow' could last years, warns RBA's Lowe
4 years, 8 months ago

Australian economy outperforming, but coronavirus 'shadow' could last years, warns RBA's Lowe

ABC  

The Reserve Bank governor says the Australian dollar is up off recent lows because of how well the nation has handled coronavirus so far, but warns that will change if there is no major economic reform. Key points: RBA governor Philip Lowe says the Australian dollar is not overvalued at its current levels of close to 70 US cents Dr …

The secret behind the booming stock market in the face of the coronavirus crisis
4 years, 9 months ago

The secret behind the booming stock market in the face of the coronavirus crisis

ABC  

Forget everything you've ever learned about the economy and the supposed link with financial markets. Just three months into what the Bank of England describes as the deepest and sharpest downturn in centuries and stock markets are on a tear, galloping back towards record levels at breakneck speed. Don't even think about thinking On Thursday night, Jerome Powell, the head …

Australia faces recession even as it prepares to reopen economy
4 years, 10 months ago

Australia faces recession even as it prepares to reopen economy

Al Jazeera  

Australia’s central bank has predicted that the country is facing its biggest economic contraction on record and says it is committed to supporting jobs and incomes as the government announces plans to relax pandemic-related restrictions by July. Indeed, Australia’s banks have deferred payments on at least 200 billion Australian dollars in loans, reflecting the financial pain felt by businesses and …

Coronavirus crisis: Major lenders revive idea of 'bad bank' to deal with high NPAs; 'this is right time to work it out', says SBI CMD Rajnish Kumar
4 years, 10 months ago

Coronavirus crisis: Major lenders revive idea of 'bad bank' to deal with high NPAs; 'this is right time to work it out', says SBI CMD Rajnish Kumar

Firstpost  

Rajnish Kumar said that the idea of bad bank was not feasible three years ago, when talk began that banks should spin off bad assets into a separate company to unburden existing banks. A bad bank structure has long been discussed in India’s policy circles to deal with the high level of non-performing assets that have hobbled banks for years, …

As part of its coronavirus response, the RBA is creating money out of thin air. Here's how
4 years, 11 months ago

As part of its coronavirus response, the RBA is creating money out of thin air. Here's how

ABC  

There's a big garage door very close to the corner of Martin Place and Phillip Street in Sydney's CBD. It's like a scene out of the Italian Job, but it's actually a pretty standard Reserve Bank procedure — the truck is delivering cold hard cash to the central bank. Stay up-to-date on the coronavirus outbreak Download the ABC News app …

Is your money safe in Australian banks during the coronavirus pandemic?
4 years, 11 months ago

Is your money safe in Australian banks during the coronavirus pandemic?

ABC  

While the coronavirus pandemic is primarily a public health issue, it's having a major impact on the economy and the financial system. "Don't withdraw all your savings because you'll just end up with $10,000 in cash under your mattress and that's probably quite unsafe," Professor Holden said. Professor Holden said the scheme was introduced after the global financial crisis in …

The coronavirus' economic fallout has its own momentum as RBA makes extraordinary intervention
5 years ago

The coronavirus' economic fallout has its own momentum as RBA makes extraordinary intervention

ABC  

The Reserve Bank is trying to stop the financial system melting down. 'Extraordinary and challenging times' Yesterday's extraordinary intervention from the Reserve Bank saw the official interest rate lowered to 0.25 per cent, to a level never seen in Australia's history. The RBA will keep the interest rate at 0.25 per cent for years, until it is confident that the …

Commonwealth Bank boss says the spread of coronavirus will have a worse impact than the global financial crisis
5 years ago

Commonwealth Bank boss says the spread of coronavirus will have a worse impact than the global financial crisis

ABC  

The head of the nation's biggest bank and number one home lender is "very" worried about the economy, and has called on state and federal governments to send cash quickly to businesses and households. Key points: The head of the CBA said there is "every reason to be concerned" about the impact of coronavirus on the economy He is supportive …

RBA slashes interest rates to 0.25pc in emergency cut amid coronavirus pandemic
5 years ago

RBA slashes interest rates to 0.25pc in emergency cut amid coronavirus pandemic

ABC  

The Reserve Bank has cut interest rates to a record low 0.25 per cent and announced extraordinary measures to help prevent a coronavirus-driven recession. Key points: Australia's economy continues to deteriorate as panicked investors wipe billions of dollars of value off local stock market The RBA will buy Australian government bonds as part of its first-ever quantitative easing program The …

Reserve Bank may cut interest rates again despite housing bubble risks
5 years, 5 months ago

Reserve Bank may cut interest rates again despite housing bubble risks

ABC  

The Reserve Bank has signalled that further cuts to official interest rates remain a live option despite the risk of refuelling a property bubble in Sydney and Melbourne. Key points: The Reserve Bank has slashed interest rates three times since June Markets have priced in a 59pc chance of a rate cut in November RBA could review its plans to …

Global debt bomb fallout threatens Australian economy
5 years, 6 months ago

Global debt bomb fallout threatens Australian economy

ABC  

Excessive debt was a key cause of the global financial crisis, but 11 years on world debt is much higher, leading many analysts to warn another crisis is on the way and Australia is far more vulnerable. Key points: Global corporate and government debts now total almost $200 trillion Corporate debt backed collateralised loan obligations have replaced sub-prime mortgage backed …

Reserve Bank of Australia warns rate cuts will do little to help with an economic shock
5 years, 6 months ago

Reserve Bank of Australia warns rate cuts will do little to help with an economic shock

Daily Mail  

Australia's record-high debt levels could spark an economic catastrophe with the Reserve Bank issuing a warning in an obscure document. During the past three decades, the national household debt to income ratio has more than tripled from 60 per cent in 1988 to a 190 per cent now While interest rates are now at a record-low of one per cent, …

Is the Reserve Bank's glass about to become half-empty?
6 years, 1 month ago

Is the Reserve Bank's glass about to become half-empty?

ABC  

In July last year, the Reserve Bank slipped an important phrase into its board meeting minutes, informing all and sundry "the next move in the cash rate would more likely be an increase than a decrease". This week in finance: Banking and financial services royal commission report tabled RBA rates meeting and Statement on Monetary Policy Company results season starts …

Australians face $700b wealth wipe-out as debt levels rated riskiest in the world: Morgan Stanley
6 years, 4 months ago

Australians face $700b wealth wipe-out as debt levels rated riskiest in the world: Morgan Stanley

ABC  

Australian households are facing a collective $700 billion cut to their wealth from the need to wind back the massive amounts of debt built up during the property boom. Key points: Australian households face a $700b hit to wealth due house price decline and need to cut debt according to Morgan Stanley Globally Australia has either the highest, or near …

RBA warns Australia is at higher risk of cyber attacks
6 years, 4 months ago

RBA warns Australia is at higher risk of cyber attacks

ABC  

Australian businesses and households are at increased risk of cyber attacks, says RBA assistant governor Michele Bullock, and this could threaten financial system stability. "Global growth could contract sharply for a number of reasons, including escalating trade tensions or financial instability in China," she said. "This would impact the highly indebted household sector as well as the balance sheets of …

Could the struggling retail sector be the banks' next big problem? The RBA thinks so
6 years, 5 months ago

Could the struggling retail sector be the banks' next big problem? The RBA thinks so

ABC  

The Reserve Bank posed an interesting question last week: are Australia's banks, and therefore the broader economy, vulnerable to a shaky retail sector. Key points: RBA paper argues changing retail environment could impact banks' asset quality Minimal impact from retail downturn so far, but RBA says it needs to be closely watched Asian banks have aggressively entered commercial property lending, …

Australia's debt binge 'coming to an end', says Bank for International Settlements
6 years, 8 months ago

Australia's debt binge 'coming to an end', says Bank for International Settlements

ABC  

The Bank for International Settlements is the central bank for central bankers, helping them conduct international transactions. In particular, the BIS calls for economic reforms to boost productivity and allow for higher growth rates, gradual increases to interest rates to start moving them back towards more normal levels and to give scope to cut them again when the next downward …

RBA to stress test banks as household debt and property investment remain key concerns
7 years, 5 months ago

RBA to stress test banks as household debt and property investment remain key concerns

ABC  

Rising levels of household debt and low wages to service it remains the biggest risk to financial stability, according to the Reserve Bank. Key points: RBA to stress test banks in parallel to APRA surveillance Cooling property market takes some pressure of the RBA RBA welcomes the crackdown on poor bank culture However, the tenor of the RBA's semi-annual Financial …

Reserve Bank holds interest rates at record low 1.5pc, warns on high Aussie dollar
7 years, 7 months ago

Reserve Bank holds interest rates at record low 1.5pc, warns on high Aussie dollar

ABC  

Despite being under pressure from tepid economic growth, weak inflation and a surging Australian dollar, the Reserve Bank has left interest rates unchanged at its August board meeting. "The higher exchange rate is expected to contribute to subdued price pressures in the economy," Dr Lowe said in his post decision statement. "This tightening in financial conditions suggests that the burden …

Australia at risk from high household debt: Bank for International Settlements
7 years, 8 months ago

Australia at risk from high household debt: Bank for International Settlements

ABC  

Australia and several other economies that escaped the worst of the global financial crisis are now threatened by their massive run-up in household debt, the Bank for International Settlements has warned. The BIS found that a 1 percentage point rise in a nation's household debt-to-GDP ratio would wipe about 0.1 percentage point off economic growth around six years later. Given …

Reserve Bank warns one-third of Australian borrowers have little to no mortgage buffer
7 years, 11 months ago

Reserve Bank warns one-third of Australian borrowers have little to no mortgage buffer

ABC  

Despite interest rates sitting at record low levels, one-third of Australian borrowers have not built up a repayment buffer, or are less than one month ahead on their home loan repayments, leaving them very exposed to an economic downturn or rise in interest rates. Key points: Households with low mortgage buffers tend to be lower-income or lower-wealth Household debt has …

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