Powered by MOMENTUM MEDIA
subscribe to our newsletter

ANZ eyes ‘widened’ gap between wages and home loans

The major bank has questioned whether the growing difference between credit growth and wage growth will ever reach parity.

A weekly update from ANZ Research on Friday (3 November) noted that as Sydney house prices begin to fall, building approvals are trending up and annual growth in housing credit remains above 6 per cent.

“While this growth in housing credit is well below the average pace of the past 20 years, it is still above income growth,” the bank said.

“Indeed, the gap between the two has widened this year despite the implementation of more macro-prudential policy. This leads us to consider whether the gap between the two can be closed, with interest rates as low as they are.”

Recent analysis from Digital Finance Analytics (DFA) found that net incomes are not covering the ongoing costs for close to 30 per cent (up from 25 per cent in May) of Australian households.

Advertisement
Advertisement

DFA’s October 2017 Mortgage Stress and Default Analysis update, released last week, found that across Australia, more than 910,000 households are estimated to be now in mortgage stress and more than 21,000 of these in severe stress, up by 3,000 from last month.

“This equates to 29.2 per cent of households,” DFA principal Martin North said. “We see continued default pressure building in Western Australia, as well as among more affluent household, beyond the traditional mortgage belts across the country.

“We estimate that more than 52,000 households risk 30-day default in the next 12 months, up [by] 3,000 from last month. We expect bank portfolio losses to be around 2.8 basis points ahead, though with losses in WA rising to 4.9 basis points.”

[Related: Sydney joins Perth, Darwin as prices continue to fall]

ANZ eyes ‘widened’ gap between wages and home loans

PROMOTED CONTENT


>A weekly update from ANZ Research on Friday (3 November) noted that as Sydney house prices begin to fall, building approvals are trending up and annual growth in housing credit remains above 6 per cent.

“While this growth in housing credit is well below the average pace of the past 20 years, it is still above income growth,” the bank said.

“Indeed, the gap between the two has widened this year despite the implementation of more macro-prudential policy. This leads us to consider whether the gap between the two can be closed, with interest rates as low as they are.”

Recent analysis from Digital Finance Analytics (DFA) found that net incomes are not covering the ongoing costs for close to 30 per cent (up from 25 per cent in May) of Australian households.

DFA’s October 2017 Mortgage Stress and Default Analysis update, released last week, found that across Australia, more than 910,000 households are estimated to be now in mortgage stress and more than 21,000 of these in severe stress, up by 3,000 from last month.

“This equates to 29.2 per cent of households,” DFA principal Martin North said. “We see continued default pressure building in Western Australia, as well as among more affluent household, beyond the traditional mortgage belts across the country.

“We estimate that more than 52,000 households risk 30-day default in the next 12 months, up [by] 3,000 from last month. We expect bank portfolio losses to be around 2.8 basis points ahead, though with losses in WA rising to 4.9 basis points.”

[Related: Sydney joins Perth, Darwin as prices continue to fall]

ANZ eyes ‘widened’ gap between wages and home loans
mortgagebusiness

Latest News

OPINION: Debt-to-income ratio limits: do they help, or hinder? With the average property in Australian capital cities now over $700,000, l...

The Treasurer has met with regulators to discuss the housing market and consider whether “carefully targeted and timely adjustments” ...

The platform has become the first private sector exchange accredited under the ​​Trusted Digital Identity Framework. ...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

How long do you think it should take to discharge a mortgage?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.