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ANZ Bank increasing caution on property lending

Wednesday, November 30, 2016 - 01:32

Australia and New Zealand Banking Group Chief Executive Shayne Elliott says his bank has become more cautious about lending to apartment developers and buyers due to concerns about overdevelopment and stagnant household incomes. Ross Miklaszewicz reports.

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ANZ is Australia's third largest bank by market value. But it's become more cautious about lending for housing - both buying and building. Stagnant incomes and over development are being closely watched. (SOUNDBITE) (English) AUSTRALIA AND NEW ZEALAND BANKING GROUP (ANZ) CHIEF EXECUTIVE SHAYNE ELLIOTT SAYING: "It tends to be in a certain niche market so it will be in student accommodation, so quite small apartments. The question there is, there's not one market for real estate so if they fell in price it's not clear what that would do to mums and dads properties, three-bedroom units out in suburban Sydney and Melbourne." At the height of the commodities boom a worker in western Australia could earn $200,00 Australian dollars. Now it's a lot less - in some case more than 50% less. Banks are meant to take such changes in their stride. ANZ's last stress tests were based on property price falls of up to 40 per cent and a near-doubling of unemployment. SOUNDBITE) (English) AUSTRALIA AND NEW ZEALAND BANKING GROUP (ANZ) CHIEF EXECUTIVE SHAYNE ELLIOTT SAYING: "When you walk in today we have to assess your ability to pay today's rate on the mortgage but also today plus 3 and a quarter percent and so that's a buffer that's built in to say 'Look, if interest rates went up .....'" But Australia's big four banks were hauled before lawmakers recently for failing to pass on a central bank interest rate cuts. The bank CEOs argued they relied on wholesale funding not linked to the cash rate. Elliott went a step further - he won't rule out raising mortgage rates.

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ANZ Bank increasing caution on property lending

Wednesday, November 30, 2016 - 01:32