BLOWING FROTH OFF HOUSING MARKET GOOD CALL: BOQ BOSS
BANK of Queensland expects the froth to come out of the housing market following the banking regulator’s move to step in with lending restrictions, but still sees house price growth of about 8 per cent in 2022.
Speaking after handing down the lender’s full-year result, which showed cash earnings jumped 83 per cent for the year, boosted by home lending, CEO George Frazis said the Australian Prudential Regulation Authority had used the right tool to cool down the potent market.
“It’s a delicate balance when it comes to housing because it’s a really important element of consumer confidence. It is also really important for small businesses and the economic recovery,” Mr Frazis said.
“We’re very supportive of APRA’s move. I think they’ve used the right tool and it’s a sensible, measured approach. We’ll still see a healthy housing market ahead, this is just about taking the froth off the top end.”
The regulator this month told banks to lift the interest rate buffer they use when assessing home loans to at least 3 per cent above the loan product rate, up from the current 2.5 per cent commonly used by the banks and credit unions.
The move will make it tougher for overcommitted borrowers to take out a loan, and came after house prices surged 20 per cent during the past year, marking the fastest growth rate since June 1989.
For the 12 months to August 31, the Brisbane-based lender booked cash earnings of $412m on the back of above system home lending growth, aided by an improved net interest margin and disciplined expense management.
Analysts had expected cash earnings to come in around $400.4m. Excluding ME Bank, which BOQ took ownership of on July 1, cash earnings rose 73 per cent to $389m. It declared a final dividend of 22c a share. BOQ shares closed down 4.3 per cent at $9.30