S & P’s views on the NZ housing market:
Housing market risk to bank profits
Standard & Poor’s has warned that New Zealand’s heated property market is at risk of taking a sharp dive.
The international ratings agency today released its 2014 outlook for the New Zealand banking sector.
It projected that low levels of credit losses would continue over the next two to three years, underpinning the profitability of the major banks.
ASB Bank yesterday reported a record half-year profit of $416 million, which was partly driven by falling impairment charges on bad debts.
However, the report said persistent house-price inflation posed a threat to that scenario, particularly when combined with an external shock to the economy.
From a very respectable source: Read S & P’s record when it comes to making housing predictions:
“Standard and Poor’s Lack Of Integrity Will Be Exposed”
After an unconscionably lengthy period of time, the dogged sleuths at our Justice Department finally are seeking some accountability from Standard and Poor’s (S&P) over their role in the housing meltdown. In a civil lawsuit against S&P announced by Attorney General Eric holder, our government is seeking the nice round number of $5 billion. S & P, a division of publisher McGraw Hill (MHP), as a credit rating agency is the final stop before a mortgage backed security (MBS), or collateralized mortgage obligation (CMO) can be issued. These MBS’s and CMO’s were nothing more than bonds backed by subprime mortgages rated “AAA” by S&P that went into default by the hundreds and hundreds of billions during the 2008 and 2009 mortgage “bubble” bursting and subsequent economic meltdown. Large institutions like pension funds, banks, endowments, and insurance companies suffered punishing and sometimes fatal losses. Is S&P culpable as claimed in government filings in that they had “significant conflicts of interests” or “Considerations regarding fees, market share, and relationships with issuers improperly influenced S&P’s rating criteria and models?” Let’s have a look and then make our own conclusions.