Last week, I told you to keep an eye on a niche area of the market: non-banks.
I made the case that they had the potential to outmuscle the big banks in their own way.
We certainly wouldn’t say that in terms of size or volume.
But big isn’t always better.
Smaller players like the non-banks can target niche areas of the market and tap into the frustrations of prospective clients.
The Australian reported yesterday that:
‘Sharp house price rises and solid mortgage and refinancing demand are creating a “significant deviation” between lender turnaround times as technology becomes a key battleground, CoreLogic says.’
One of the executives at CoreLogic says smaller lenders can approve a loan in a few days.
That stands in contrast to some of the big banks, where apparently they can take a few weeks.
We already know that ANZ’s mortgage approval is a dog’s breakfast currently. And Westpac’s isn’t booming either.
Now, we also see this…
‘Westpac has taken an aggressive position in its troubled mortgage business, lowering the standard variable rate for some products below two per cent.
‘The bank, however, has also lifted the price for some fixed-rate loans.
‘A note to mortgage brokers revealed the move to cut and hike interest rates In the key mortgage business, where Westpac has been losing market share as a result of loan processing problems offshore.’
Now, let’s contrast that with the latest results from…*drumroll*…Pepper Money Ltd [ASX:PPM]. These came out this morning.
This is their half-year results because they operate on calendar year reporting.
Whither business of late?
Its net profit after tax is up 40% since last year. The figure would be even higher if it weren’t for its one-off IPO expenses, too.
Mortgage originations were up 33%. Interest expense and losses were down.
All in all…a fine result!
It will be interesting to observe the market’s reaction today.
Aussie Property Expert’s Bold Prediction for 2026. Discover More.
The NSW and Victorian lockdowns aren’t helping the outlook…but Pepper is guiding that they can work through it.
I don’t doubt it. While those in insecure and low-paid work are blocked from work and trade thanks to Australia’s COVID response, the asset-rich can leverage the housing cycle using cheap and subsidised debt from their lounge rooms. Hey, some don’t even need to inspect the house.
And that’s not so crazy if you’re just land banking the location as so many ‘investors’ do.
And so Australia walks down its mad path of inflating the housing market to its inevitable and grisly end in about five years.
And when that recession hits, we’ll have emptied all the state and federal treasuries fighting COVID; instead of the real war we should be fighting…and that’s the culture of cheating via asset inflation instead of productive work.
People aren’t stupid. They can see the system is rigged and a scam.
And so we’ll have more strikes and discontent as the pissy wages so many earn buy less and less, but property prices and share markets lurch ever higher thanks to unjust tax policies and credit created from nothing that produces nothing.
It was the teachers threatening to blow the other week. And now the truck drivers are about to strike.
All these are symptoms of the chaos Australia’s politicians are creating.
What a spider’s web we weave. But you’ll only hear this view in The Daily Reckoning Australia. We are the alternative press.
Indeed, my wife attempted to show me something about COVID from a mainstream TV show the other day.
Please. Don’t waste my time.
As if their advertisers, brand managers, and PR shrills would let any truly dissenting voices on air except the government narrative.
Listening to the mainstream media is a fool’s game. One has to discovers things for yourself.
Here’s what I know…
Australia’s property market will keep inflating…so whichever mortgage lender can monetise this best is as close as you get to a slam dunk in something as capricious as the share market.
But, hey, don’t take my word for it. You could always ask the guys on TV for a second opinion.
Best wishes,
 |
Callum Newman,
Editor, The Daily Reckoning Australia
PS: Our publication The Daily Reckoning is a fantastic place to start your investment journey. We talk about the big trends driving the most innovative stocks on the ASX. Learn all about it here.
