Suggestions by former ANZ Economist Cameron Bagrie that his former employer’s move to implement 40% Loan to Value restrictions shows it is thinking of the best interests of customers would be laughable if it wasn’t so tragic. The last thing the ANZ bank is doing is thinking of its customers.
If it was doing that its shareholders would be up in arms demanding answers.
As a business its job is to create money out of thin air and lend it to borrowers in a way that’s designed to return the greatest amount of profit to those shareholders.
The announcement by the ANZ is cynically making the most of the opportunity for a public relations exercise that appears to show it in a responsible light.
If the bank had wanted to do the best thing for its customers it would already have been severely restricting the ability of big investors to borrow more money and ensured that in doing so it put the brakes on rampaging house prices to give first home buyers a chance.
But that would not have suited its function which is to meet its shareholders’ increasing dividend requirements.
With interest rates so low, ever increasing house prices have generated a money creation splurge by the commercial banks as lending on higher house prices helps them replace their tighter margins with an increased volume of interest income and loan fees.
The ANZ is simply concerned that some of its borrowers are becoming over extended and is clipping their wings a little to ensure that when there is a downturn in the housing market it does not get caught with a mass of bad debts that would cause it significant problems.
It could have done that without the fanfare – and probably already was – by simply declining to lend certain investors any more money.
The reality is that the bulk of property investors will be able to meet the new 40 percent LVR level the ANZ has announced and there are so many loopholes there will be little effect on runaway house prices while commercial banks see property as the highest profit avenue for their newly created money.