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clock Created with Sketch. 08/06/20
16:04
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Originally posted by mining=$:
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You're making the assumption these people will ever be able to pay off the loans? The fact they are on a holiday while adding to the loan it doesnt really make a great difference to the banks returns over time. The bigger issue is if these holidays exist they exist because people cant afford their mortgage atm. What happens when stimulus is cut as you cant just print money forever? A lot of business will not open back up as they were already running on the brink pre covid and theres no way they will be able to get another loan. A report released today shows 37.5% of households are under mortgage stress which is defined as having to pay an amount on the mortgage repayment greater than the income received form that household for the month up from 32% pre covid. Let that sink in..... 37% of house holds having larger mortgage repayments monthly than they are receiving via income!!! If you ask me that isn't sustainable and when jobkeeper ends and life returns to 'normal' there will be a lot of people out of work so what do they do they default on the loan! This tied in with the fact people have been reluctant to sell their houses at the start of this crisis is adding to the pressure the housing makret will face in 12 months time when people will start to sell as they have too. All this supply will come online for people who thought they could ride the pandemic out and sell for a better price on the other side when in fact they were better off selling at the start. This will in turn lead to lower house prices etc. And then comes the factor of zero interest rates the banks margins are as tight as they cant pay out any lower spreads on their deposits and may still need to shrink their mortgage rates to remain competitive so growth in profit is also subdued. But dont forget regulators have been tightening their grip on banks for the past decade requiring stupid capital requirements etc so if we see this housing fall and an increase in bad debts or higher risk assets equity will need to be raised or dividends will be reduced and not return to where they once were. Also the fact the public hates banks will make it hard for them to try and grow profit as the media will slaughter them for the everyday aussie battler struggling while they go on and increase profit (not that i agree this should be the case but its a fact of life). All of these things tied together and people think banks will be back to all time highs? You have to be kiding me but i'd love to hear an argument for it. And that brings me to my last point cba is trading at a much higher premium to the other 3 big banks so in the event where a terrible crisis unfolds which could still occur they are in a much higher risk position to be piling into at the moment. I would continue to hold as i think the market is irrational and hasnt taken this all into account and will probably move higher however the risk is still there. All in my honest opinion and i'd love to hear others take on the situation and growth potential for banks into the future?
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all sounds very rational you make good pointels, but the market is far from rational atm you are defs correct with other banks being better value this is why they are bring higher percentage profits stock wise atm. next week will be huge for banks again, the momentum is to big at this stage buy buy buy short term them flog em off is what i think needs to be done
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