Swan warns banks to ease mortgage strain because of falling global economy
Australia's biggest banks are to stop lending to home buyers as they struggle to keep up with a falling demand for housing across the global economy.
The Reserve Bank governor, Glenn Stevens, confirmed that the Australian government would impose mandatory limits on bank mortgages starting on Thursday, in an announcement that was the strongest hint yet that the banks would be forced to cut mortgage rates.
The government plans to spend $30bn a year in stamp duties on banks to help ease concerns over declining credit growth. The bank tax, if approved by parliament, would take effect immediately.
Stevens was on Friday facing fierce criticism from the major housebuilders for failing to impose the necessary restrictions in the lead-up to the market plunge – when the price of housing fell by more than 5 per cent in a single month.
He said banks should ease their mortgages by allowing investors to buy longer-term loans when mortgages have "strong" connections to the banking system.
His comments came at a time when the US, Britain, the European Central Bank and the Federal Reserve were struggling to ease global inflation.
A series of smaller banks have reported falling bank lending, partly as a result of the finan공주출장샵cial crisis, in the belief the market should stabilize. The latest official figures indicate the US housing market has begun to recover from a slowdown of 5.2 per cent in July to June, the best performance since the market began its second round of cheap asset purchases.
Bank of America and Wells Fargo reported third-quarter profits of $1.4bn, in line with analysts' expectations. JPMorgan also reported a $1bn profit, down 28 per cent, while Bank of America's net profit declined 17 per cent from the same period in 2015. It has so far reported a loss of $21bn, down $26bn from the same period in 2014.
Stephen Howard, the deputy chief of staff at the Reserve Bank, said the government would impose a 10 per cent deposit surcharge on bank mortgages, and a further 25 per cent to bank credit card borrowers for the first time in March.
Banks have been warned that the mortgage market will not bounce back into a recover여주안마 여주출장샵y any time soon. They face the prospect of having to buy loans from more borrowers and cut rates and capital requirements.
Some economists warn that the banks are running "irrational, high risk 에그 벳bets" on subprime mortgage loans, which have seen interest rates rise to unsustainable levels.
Bank of Americ