Home loans suffer record slump as CBA warns of more mortgage stress

Australia's housing downturn is deepening, with new home loans suffering their biggest quarterly fall on record as higher interest rates and changes to property investment taxes drive buyers out of the market.

Australian Bureau of Statistics figures show new home loans plunged 15 per cent in the September quarter, the sharpest decline since records began in 2002.

Investor lending led the collapse, falling 30 per cent following changes to capital gains tax and negative gearing rules. Loans to owner-occupiers dropped more than five per cent.

The figures help explain why house prices are falling so sharply, with Commonwealth Bank forecasting a 15 per cent national decline by late next year.

Australia's biggest home lender is also seeing growing signs of financial stress.

The proportion of CBA mortgage customers more than 90 days behind on repayments has reached its highest level in six years, prompting the bank to increase provisions for bad debts.

Listen to today's episode 🎧 

Greed-o-meter

Apple has reclaimed its position as the world's most valuable company, overtaking Nvidia as the chipmaker's share price tumbles amid the spy scandal involving chief executive Jensen Huang. Nvidia has lost more than $US1 trillion in market value since its peak last month, reflecting a combination of concerns about AI spending, the US midterm elections and the controversy surrounding Huang. Apple is now worth just over $US5 trillion, about a trillion dollars more than Nvidia, highlighting how quickly fortunes can change at the top of the sharemarket.

Fear & Greed Q+A today

In the latest episode of our weekly series with MLC Expand, Director of Retirement Innovation Ashton Jones joins Sean Aylmer to explain why so many Australians are afraid to spend their superannuation, even after decades of saving for retirement:

 

"We've actually conditioned Australians to think about superannuation purely as a savings vehicle. You go from working for your whole life and receiving an income from your employer to actually paying yourself from your superannuation, from your retirement savings.

 

And that shift from having a mindset around saving, a mindset around building your nest egg, looking at your balance, checking your balance, it's quite a big shift to go from that to a mindset of actually I now need to convert that balance into an income amount.

 

They've been conditioned to track the balance going up. The first time they actually have to draw down from their superannuation balance, it does induce a level of fear or worry."

News in brief

David Jones to close half its stores

David Jones will close half its stores by the end of the year as receivers attempt to rescue the 188-year-old department store chain. Closures include Sydney's Macquarie Centre, Parramatta and Warringah Mall, Melbourne's Malvern Central and Glen Waverley, and the Perth flagship. Many of its 6,000 employees face losing their jobs.

Macquarie fined $14 million over savings rates

Macquarie Bank has agreed to pay a $14 million fine after misleading customers about promotional savings account interest rates. Almost 40,000 customers have already received $8.8 million in compensation.

Push to rewrite capital gains tax changes

Independent MP Allegra Spender is gaining support for an alternative to the government's capital gains tax reforms. Her proposal would retain inflation-based discounts for investment properties but introduce a 40 per cent discount for businesses, shares and share options.

ASX rises as Australian dollar hits seven-month low

The Australian sharemarket reached another ten-week high, with the ASX 200 edging up 0.3 per cent to 9,153 points. Technology and utilities led gains, while banks lagged. The Australian dollar fell below 69 US cents after stronger-than-expected American inflation figures boosted the greenback.

Anthropic IPO could value AI giant at $US1.5 trillion

Strong investor demand could push Anthropic's valuation to $US1.5 trillion ahead of its planned stockmarket debut next week. The AI company is seeking to raise as much as $US64 billion, with Google, Nvidia and Microsoft committing a combined $US26 billion through a private placement. The proceeds will help fund enormous computing costs.

Apple's autocomplete has a secret blacklist

Apple's autocomplete system reportedly refuses to suggest certain words and phrases, including political expressions such as 'Tibetan independence' and 'Kashmir dispute'. Researcher Derik Kauffman calls it Apple's 'grey list'. Even phrases including 'Australia is a very bad' are reportedly blocked from swipe typing, raising questions about how technology companies filter language.

Fear-o-meter

Electric Vehicle Council, on the impact of petrol prices on inflation

Almost one-fifth of Australia’s annual inflation came directly from rising petrol and diesel prices, highlighting the potential for electric vehicles to protect household budgets and reduce Australia’s exposure to global oil shocks.

New analysis by Endgame Analytics for the Electric Vehicle Council finds that rising automotive fuel prices contributed 0.77 percentage points to Australia’s 4.3% annual inflation rate in September.

With petrol and diesel prices up 23.6% over the year, the findings highlight a broader economic benefit of electric vehicles: reducing Australia’s dependence on fuels whose prices are largely determined overseas.

“Petrol and diesel prices aren’t just hurting motorists at the bowser. They’re adding to inflation across Australia,” said Electric Vehicle Council CEO, Julie Delvecchio.

“Electric vehicles give Australians a way to break that direct link with global oil prices. The more of our transport we electrify, the less exposed we become to future fuel price shocks and inflation.”

To illustrate Australia’s exposure to oil price shocks, Endgame Analytics modelled what inflation would have looked like if all household driving had been electric. After allowing for charging costs, annual inflation would have been around 0.6 percentage points lower. This is an illustrative scenario, not a forecast of overnight adoption.

When translated into running costs, rising fuel prices added an estimated $442 to the annual cost of running a small SUV 15,000km per year. By comparison, higher electricity prices added an estimated $48 to the cost of running an EV – around a tenth of the cost.

Forwarded from a friend? Sign up to our daily newsletter