At the moment the signare still just that – signs. But this new one is ominously familiar.
Aussie Home Loans which is Australia’s largest loan broker is unable to get finding. Aussie originates loans which it then passes on th ethe big banks. Aussie is woned and funded by two of those banks ANZ and Commonwealth Bank.
Commonwealth is the minority owner and refused a request by Aussie for extra cash because, Commonwealth saud, it is itself in the process of trying to refund a large chunk of its 236 billion dollar loan book. Commonwealth also relies on wholesale funding. Is this ringing any bells with anyone?
So Aussie turned to another bank it brokers for, ANZ, who have now also said no. No reason given. And when a bank declines to give a reason well, we can all guess why.
WIthout AUssie acting as a broker the banks are going to do less business. So, what? They suddenly don’t want business? Why ever could that be. Short of a little cash there boys? Or caught the smell of something on the breeze?
Aussie is the front line of the mortgage business. But it is the banks who take on the mortgages and who either hold them or securitixe them and try to sell them on. Under that model the banks are dependent on wholesale fiunding for their own cash flow and funding. And cash, as it is everywhwere on the globe, is drying up. The banks will cry liquidity again. But beneath that veneer of liquidity shortage is the stink of insolvency and a bursting bubble.
This is just a little indication no more. But sometimes indications should be heeded.