One of Australia’s biggest walking contradictions, “Aussie” John Symond, last week launched a scathing attack on the RBA for maintaining a stance which doesn’t make Aussie John as much money as he could be making.
In a speech to the Australia-Israel Chamber of Commerce in Brisbane, Symond attacked the RBA for being “asleep at the wheel” by not lowering interest rates sooner. At the same time, Aussie John launched a strident defence of Australia’s property market, saying he was “confident, notwithstanding a lot of hype from offshore analysts about a housing bubble, of Australia’s fundamentals”. He continued: “Their argument is that most housing markets around the world have gone through a bust, so why not Australia?”
Symond is no doubt talking his own book — literally. His company, with a multi-billion loan book, makes money from people borrowing to purchase properties — a stiff (continued) correction to the Australian housing market won’t help his bottom line.
Symond’s comments, of course, aren’t necessarily backed by fact or logic. The so-called offshore analysts are critical of Australian housing market precisely because of the fundamentals that Symond refers to. Specifically, Australian property has globally low rental yields (of around 3%) and Australia is a global leader in housing debt. Australia’s mortgage debt to GDP of almost 90% is higher than that of the US before the global financial crisis. Quite simply, Australian banks have allowed the price of housing to completely outstrip its intrinsic value due to their willingness to lend. Even after the GFC, the big four banks (ably assisted by mortgage brokers like Aussie) continued to lend on loan-to-valuation ratios of 90% or even 95%.
Aussie John then noted the RBA has “left interest rates comparatively high … for the last 12 months [and] Blind Freddy could see inflations was not a problem, so why was the RBA holding off?”. Symond is perhaps forgetting the millions of Australians who encounter worse living standards when interest rates fall. Pensioners on fixed income or savers are all materially worse off when the RBA lowers rates. No doubt lower interest rates are better for Aussie John, his paymasters at the Commonwealth Bank and his over-leveraged clients, but that is not the only concern of the RBA.
Symond’s rhetoric is hardly surprising: while portraying himself as a friend of the battlers, he has long since progressed from his days of struggle. Symond, who narrowly avoided bankruptcy in the 1980s after striking a deal with lenders, lives in one of the nation’s most expensive homes, a $50 million mega-mansion overlooking Sydney Harbour in Point Piper (Australia’s most prestigious suburb). The pile comes complete with 75 metres of water frontage, a home theatre and two swimming pools.
Aussie John is also famous for rallying against the big four banks, only to sell a third of his company, Aussie Home Loans, to the biggest bank in Australia, CBA, in 2008. But don’t expect to see it on Aussie’s webpage — the About Us page doesn’t refer to CBA anywhere, not does Aussie’s Wikipedia page which appears to have been penned by the group’s PR department.