Mortgage banks look to wholesale finance to fuel expansion in lending

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Mortgage banks increasingly relying on foreign capital to grow their loan portfolio
For the fourth month in a row, Australian banks relied on wholesale finance to fuel expansion in lending, outstripping growth in deposits. Banks obtained about $150 billion in capital from the international markets last year, returning to pre-GFC levels. The money supports an expansion of total credit to Australians of 5.1 per cent, dominated by growth in housing loans. It's the quickest pace since 2009, new figures showed on Thursday. Loans to property investors grew 8.7 per cent, for the quarter, a growth rate not seen since early 2008. But banks took in $14.7 billion less in deposits this quarter than they lent to borrowers, using international finance to bridge the gap – about four dollars of every 10 new dollars lent. Three of the Big Four home mortgage banks – CBA, Westpac and NAB – cut five year fixed interest rates below 5 per cent last week, a sign of intensifying competition for the mortgage market … and the availability of funding at rock-bottom rates in the international marekts. 

Canberra must wean itself from dependence on property and learn to innovate: urban planner
Viv Straw, president of the Planning Institute Australia (ACT division), describes Canberra as a city in a landscape and “a city of villages that relate together,” exhorting Canberra's leadership to reduce its reliance on government and the property industry while becoming an easier place to set up a business and compete internationally. Canberra has been able to grow in size, but isn't innovating well, leading to an over-reliance on the property markets for economic activity. “We need to be very clear about how we differentiate ourselves in the international market. What is it that will attract investment? Is it low tax? Is at liveability?” Read the full story here.

Signs of a tight market: Sydney cracking down on illegal flats
The City of Sydney council has ordered the owner of a scandalously-overcrowded boarding house at Quarry Street in Ultimo to close the units and evacuate after a series of news reports. Police have been sent in to observe compliance after the owner ignored an earlier order. The City has also sought a Land and Environment Court injunction to prevent unauthorised use continuing there. Reporters have visited since coverage of the case began, to find prospective tenants moving in even as the court was ordering people to move out. Illegal operators routinely advertise on sites like Gumtree, targeting students and temporary workers. Read the full story here.

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