Australia’s major banks are again in the limelight with few unrelated sets of news. One such piece encircled a revisit to macroprudential rules as proposed by many domestic lenders. Particularly, limits imposed by Australian Prudential Regulation Authority on property investor and interest-only mortgages have again been challenged as domestic lenders are proposing an overhaul of the limits on mortgages and having tighter regulations for the big four banks. Earlier this year, interest-only lending was capped at 30% of new loans by APRA. Lenders other than the big four (including Suncorp and Bank of Queensland) still believe that existing restrictions have unhealthy effects on them owing to the landscape of the sector stooped towards the big four.
The major lenders, on the other hand, have announced about eliminating ATM fees that was charged to customers of other banks ($2 fee to withdraw cash from their ATMs). The move, which seems to come after mounting pressure from the government, is not expected to have any major earnings impact on the banks (under $50m pre-tax for each of the majors). At the same time, treasurer, Scott Morrison, has warned the big four banks, which will now be monitored to ensure that the ATM fees is not recovered through any extra charges imposed on customers. On a side note, many believe that this can give a marketing boost to small lenders.
Meanwhile and amid the uncertain environment with regulatory concerns creeping in when household debt and incomes are unable to balance the property scenario, major lenders are seen to be seeking more financial information from property borrowers. One such move has come from ANZ, which has recently issued a confidential blacklist of postcodes in Brisbane and Perth where tighter lending terms and conditions for apartment buyers are said to be imposed at the back of issue relating to supply-demand scenario and falling prices. The bank is issuing guides to brokers, who act as intermediaries between the bank and borrowers, on the minimum requirements and guiding principles for the broker-client relationship. There is tightening at many ends, for instance, borrowers are now required to have a minimum deposit of 20%.
It will be interesting to watch out for the on-going developments in the sector which might prove to be gain for some.
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