Big Four's mortgage exposure a “systemic risk”

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Big Four's mortgage exposure a “systemic risk”
Banks’ increasing exposure to housing loans may prompt regulators to force the Big Four to hold more capital against risk, which will drive up mortgage costs. David Murray, a former Commonwealth Bank chief executive tasked by the government to look at the issue, described the rapid rise of mortgage exposure as a “systemic risk” in his 460-page interim report. The Big Four are allowed to hold much less capital in reserve than regional banks because their size theoretically insulates them from shocks. This lower capital requirement gives them a strategic advantage against regional rivals, arguably incentivising them to overweight their portfolios in home mortgages. Smaller banks have been agitating for their larger rivals to come under the same constraints. Read the full story here.
 
Brokers don't always provide the best deal 
About half of prospective home buyers use a mortgage broker during the loan application process to answer questions, lodge paperwork, track progress and help with settlement. Brokers are often better negotiators than their customers. But those who use mortgage brokers also look at only about a fifth of the lenders one might find going it alone – particularly online lenders like UBank and Loans.com.au UBank and Loans.com.au. The difference may cost customers money, said Canstar research manager Mitchell Watson. "A broker has a panel of lenders and they'll provide you the best option from that panel but outside of that, people should also consider what else is out there and online is a growing space with new lenders coming through regularly," Mr Watson says. Read the full story here.
 
Three ACT suburbs … and Melbourne … take top places for the fastest growing areas of Australia
Three new ACT suburbs – Crace, Bonner and Casey –  lead the Housing Industry Association Economics Group list of fastest-growing areas in its Population and Residential Building Construction report. All three of these areas recorded population growth in excess of 40 per cent between 2012 and 2013. It helps that in each case, the area was essentially empty before a wave of construction populated them. Melbourne stands out in the list, given its large existing population, simply because it’s harder to outgrow the country when you’re already the second-largest city on the continent. Suburbs required to population growth faster than the national average to make the list, along with approved residential building work in excess of $100 million, for regions in New South Wales, Queensland, Victoria and Western Australia, or in excess of $50 million for South Australia. The Northern Territory and ACT were required to record over $20 million. In Tasmania the threshold was $5 million. Only 50 suburbs met both criteria. Read the full story here.

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