The big banks were smashed again on Thursday as investors bet mortgage volume growth would fall as lending restrictions get tighter.
Investors have wiped $46 billion off the market value of the big four banks in a week, betting that sharp increases in the central bank’s cash rate would end years of blockbuster growth in their mortgage books.
Commonwealth Bank lost 2.6 per cent to $94.95, National Australia Bank was down 2.3 per cent at $28.25, Westpac shed 3.7 per cent to $21.17 and ANZ Bank fell 2.3 per cent to $23.35, against a broader 1.4 per cent decline in the ASX 200 index on Thursday.MST Marquee senior research analyst Hasan Tevfik said the sell-off would continue while the property market remains under pressure, with banks no longer able to rely on growing their earnings by selling more mortgages.
“However, by April next year, if the cash rate rises to 2.35 per cent as forecast by Westpac, the maximum the same family would be able to borrow from the bank would be approximately $163,500 less than a year ago, before the hikes began,” she said. “It seems a bit too aggressive. The banks will probably have higher profitability than everyone is thinking, it’s a bit premature to chuck them all out this week.”Mr Tevfik said the Reserve Bank’s aggressive move on Tuesday to increase the cash rate by 50 basis points, which would ordinarily boost the banks by lifting the margin they earn on loans, had spooked investors.
ABS data released last Friday showed that the value of new home loans fell by a much deeper than expected $2.13 billion in April, with new lending to owner-occupiers dropping by $1.57 billion, or 7.3 per cent compared with March and $2.92 billion or 12.8 per cent from a year ago.Meanwhile, investor lending dropped by $557 million or 4.8 per cent from the previous month, but was up $3 billion, or 37 per cent, compared to April last year.
Mr Tevfik said the analysts’ focus on non-performing loans or fears about a broader recession were overblown, but it was difficult to see volumes growing in the current property market, especially with tighter lending restrictions.
Australia Latest News, Australia Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
The RBA is facing a housing tightropeFormer governor Ian Macfarlane says the property market is the big hurdle for the central bank as it raises rates, but it cannot be “hostage” to home buyers.
Read more »
The RBA is facing a housing tightropeFormer RBA governor Ian Macfarlane says the housing market is the big hurdle for the central bank as it raises rates, but it can’t be “hostage” to home buyers.
Read more »
Commercial property prices likely to suffer stiff declinesOPINIONL The commercial property market is feeling the sting from rising interest rates, with the sharp declines in listed real estate stocks set to spill into the unlisted market.
Read more »
NAB kicks off $60m raise for agriculture fundie AAMAgricultural fund manager AAM Investment Group had National Australia Bank drumming up interest in its $60 million equity raise to fund livestock and property purchases.
Read more »
Green financing takes off in commercial propertyIt was a long time coming, but it’s now clear that Australia’s commercial property sector has finally embraced sustainable financing.
Read more »
Market closes down after weak performance from banksBanks have dragged the ASX lower again as the market opened down 0.5 per cent this morning and ended 1.42 per cent down, according to Sky News Business Reporter Edward Boyd.
Read more »