Pete Wargent blogspot

Co-founder & CEO of AllenWargent property buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place), & CEO of WargentAdvisory (providing subscription analysis, reports & services to institutional clients).

5 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.

"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he's one of the finest property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.

"I've been investing for over 40 years & read nearly every investment book ever written, yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.

"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data & charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, author of the New York Times bestsellers 'End Game' & 'Code Red'.

"The level of detail in Pete's work is superlative across all of Australia's housing markets" - Grant Williams, co-founder RealVision - where world class experts share their thoughts on economics & finance - author of Things That Make You Go Hmmm, one of the world's most popular & widely-read financial publications.

"Wargent is a bald-faced realty foghorn" - David Llewellyn-Smith, 'MacroBusiness'.

Wednesday, 3 May 2017

WA home loan portfolio deteriorating

Cash profit misses

ANZ reported an interim cash profit of $3.4 billion for the half, an improvement of 23 per cent - the prior year result having been hit by write-downs - but missing market expectations of a $3.5 billion result. 

The group's net interest margin was only impacted to a very small extent by funding costs, but did decline nevertheless.

ANZ announced rate hikes on investor and owner-occupier loans last week, with steep increases of up to 40bps on interest-only products (but some cuts being applied to principal and interest mortgages).

Over the next year we can expect to see lenders forcing borrowers away from interest-only loans as I looked at in more detail here.

This isn't the place for a detailed review of the ANZ interim financials, but below I'll take a quick look at the home loan portfolio. 

Delinquencies rise in WA

ANZ's 90+ day home loan delinquencies have been relatively contained to date in the Australia division, though they have tracking at somewhat higher levels than seen in recent years. 

Source: ASX

A closer look at the portfolio performance for the Australia division reveals the concerning rate of deterioration in home loans that are 90 days past due in Western Australia.

Since 2013 home loans that are 90 days past due in the state have risen sharply from as close to zero as you will see across a loan book towards 1.4 per cent of home loans. 

Source: ASX

Queensland has typically had a higher rate of delinquency than elsewhere since severe flooding in the state in 2010-11. 

Now more than half a decade on the flood-related delinquencies have mostly either been impaired or resolved, but loans that are 90 days past due remain higher than elsewhere in Australia due to the very poor economic conditions in many parts of regional Queensland.

Vacancy rates are also elevated in Perth and many parts of regional Western Australia and Queensland, a knock-on impact from the end of the resources construction boom.

The ANZ share price took a knock from yesterday's results, dropping by 2.12 per cent by the close to $32.25. 

Genworth Mortgage Insurance (ASX: GMA) dropped 4.19 per cent to $3.20 yesterday, having been down by 7 per cent in early trade.