Pete Wargent blogspot

Co-founder & CEO of AllenWargent property advisory & buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place) - clients include hedge funds, resi funds, & private investors.

4 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.

"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he is one of the better property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete Wargent is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.

"I've been investing for over 40 years & read nearly every investment book ever written yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.

"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data and charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, and author of the New York Times bestsellers 'End Game' and 'Code Red'.

"Pete's daily analysis is unputdownable" - Dr. Chris Caton, Chief Economist, BT Financial.

Invest in Sydney/Brisbane property markets, or for media/public speaking requests, email pete@allenwargent.com

Saturday, 6 February 2016

Genworth delinquencies remain low

Result

Monoline mortgage insurer Genworth Mortgage Insurance Australia (GMA) released its FY15 results, with new CEO (and fellow former Deloittian) Georgette Nicholas taking the helm for its latest investor presentation.

I discussed why Genworth might represent an interesting proxy for housing market sentiment in a little more detail here

As expected following the loss of a key contract gross written premium was down by 20 per cent from FY14, largely due to Westpac canning its Lenders Mortgage Insurance (LMI) deal with Genworth in February 2015, but underlying earnings performance remained resilient.


The number of paid claims was well down to 616 in 2H15 from 664 in the prior corresponding period of 2H14 (and way down from 1,091 in 2H13) although the average paid claim increased year-on-year to $63,500 from $54,400.


Delinquencies very low

Genworth's ASX releases are perhaps most interesting for their ongoing insights into mortgage delinquencies, and the latest presentation showed that delinquencies remain at a very low level of just 0.38 per cent nationally. 

Queensland has the highest delinquency rate of the states (0.53 per cent), in no small part thanks to the now discredited belief that house prices and vacancy rates in mining towns could emerge unscathed from the end of the resources construction boom. 

Queensland's delinquency rate has also been elevated since the 2011 book year when delinquency developments were exacerbated by flooding across huge swathes of the state.

Strip out those exceptional items and mortgage books in the remainder of the Sunshine State are in reasonably solid nick.

South Australia is next in line at 0.51 per cent, perhaps unsurprising given the elevated rates of unemployment consistently being recorded in Adelaide and regional South Australia. 

Delinquency rates were exceptionally low in New South Wales for such a populous state at just 0.27 per cent.


Mapping GMA's delinquency developments by book year shows how delinquency rates have cascaded handsomely lower since the particularly troublesome 2008 and 2009 book years. 


Share price rebound

The share price responded positively to the FY15 investor presentation to trade up by +4.33 per cent by the market close yesterday at $2.65.


If Genworth is perceived to be any kind of worthwhile bellwether for property market sentiment (commonly claimed when the market cap is down) then the 20 per cent recovery in the share price from $2.21 to $2.65 augurs well for the mortgage default outlook.

This is particularly so given that the share price dipped sharply in September as the APRA crackdown on property investors bit hard, adversely impacting expected volumes through 2016.

The Genworth share price had slumped to a 52 week low of $2.21 on September 2015 as the Glencore share price crash rocked commodities companies and share market confidence.