Bank Lending

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<p>GUEST OBSERVER</p>
<p>Non-bank lending has become a phenomenon in the Australian property market. Although official statistics are hard to come by, anecdotal evidence suggests that private groups are lending Aussie companies and individuals billions of dollars each week<em>.  </em></p>
<p>What created this amazing trend in private lending, what does the non-bank lending landscape look like and where will the market go next?  Delving into these questions will give you a good idea about the state of the Australian real estate market today.</p>
<p><strong>How Did It All Start?</strong></p>
<p>Non-bank lending has been going on in Australia for many years. Companies like Pepper and Resimac have taken over a huge chunk of the home mortgage market and Aussie Home Loans’ CEO John Symonds has for years been assuring Australians that “At Aussie, we’ll save you.”</p>
<p>In the commercial lending space, Development Finance Partners, MaxCap, Qualitas and Balmain Group have been underwriting property developments for a long time.</p>
<p>Things accelerated sharply, however, in July 2015 when the Australian Prudential Regulation Authority (APRA), aided by BIS Shrapnel and egged on by the RBA, significantly increased the capital requirements for Australian banks.</p>
<p>This, along with the Labor Party’s aggressive stance on negative gearing, and a scandal involving falsified loan documents at ANZ and Westpac, has resulted in a significant slowdown in property lending by Australia’s Big 4 banks:</p>
<p><a href="/images/2016/09/05/big-4-lending-book.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/09/05/big-4-lending-book.png" alt=""></p>
<p>Had the Big 4 continued to grow their investment housing lending book at the same average rate as they did the 12 months ended June 30, 2015, they would have lent an additional $68.4 billion into the market.</p>
<p>At the same time, the Big 4 have also begun to pull back on corporate lending, and while this trend is still emerging, it has added to the challenges faced by property buyers:</p>
<p><a href="/images/2016/09/05/big-4-lending-book.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/09/05/big-4-lending-book.png" alt=""></p>
<p>Faced with dramatically tougher lending requirements, Australian property developers, investors and buyers have been scrambling to fill this $68 billion gap.</p>
<p><strong>Old Problems</strong></p>
<p>The lending drought has given new urgency to the age-old financing problems faced by every property developer.  Land banking, the first step in most property developments projects, has mostly been subjected to lower loan value ratios (LVRs), shorter loan terms and higher interest rates.  Development and mezzanine funding have also seen a toughening of terms, as well as the imposition of higher requirements for presales and decreased limits on the portion of offshore sales allowed.</p>
<p>Perhaps the problem that’s proven most urgent, dangerous and difficult to solve has been settlement pipeline financing.  Although final settlements often only account for 20% of the total sales price, many borrowers, especially foreign investors, have found it impossible to obtain financing of any kind for this portion of the acquisition.</p>
<p>This has created a great deal of nervousness around settlement pipelines, and the possibility that large numbers of buyers would fail to settle their purchases.</p>
<p>While this has not happened and, in fact, groups like Lendlease have announced <em>higher</em> than anticipated, settlement risk remains a concern in many corners.</p>
<p><strong>New Solutions</strong></p>
<p>The challenges of property developers and investors have attracted the attention of private lenders looking to charge premium rates and fill the gap left by the banks. In addition to established players like Wingate, Balmain and a host of existing property funds, three new groups have stepped into the market.</p>
<p>The first of these new entrants are cashed-up Australian property developers. These players are usually large property companies that are flush from the recent completion of a project.</p>
<p>They tend to be highly localized, only lending into a particular type of development (e.g. only high-rise apartments) and only in one geographic area (e.g. Melbourne CBD).  These lenders are often looking for ways to get into the projects they’re funding, with an eye to taking over the development if the borrower is unable to repay the loan.</p>
<p>A more opportunistic group includes purpose-created special investment vehicles, family offices and high-net worth investors. This group is attracted to the high interest rates and strong security positions on offer. These players are more transactional, less strategic and much less established than cashed up developers.</p>
<p>The final group consists of foreign banks, investment funds and high-net worth investors, particularly from the US, China, Singapore and Malaysia. These entities are often connected to property investors from their home country, who have some knowledge of the Australian market and who see an opportunity to further their investment goals by jumping in where the large Australian banks have moved out.</p>
<p>Taken together, these new sources of non-bank lending are beginning to make a substantial impact on Australia’s property lending deficit.</p>
<p><em>David Chin is managing director, Basis Point, and can be contacted <a href="https://basispoint.com.au/" target="_blank">here</a>.</em></p>
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jchancellor-FAypfDUnLy

The surprising rise of non-bank lending in the Australian property market

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<div>EXPERT OBSERVATION</div>
<div> </div>
<div>It's a happy new year, and all that, but not so much for bankers, with lending growth continuing to flounder. </div>
<div> </div>
<div>The Reserve Bank's latest figures showed credit growth slowing to 4.4 per cent, down from 5.2 per cent a year earlier, and broad money growth at fresh quarter-century lows of just 1.86 per cent. </div>
<p> </p>
<div class="separator"><img src="https://1.bp.blogspot.com/-1I8fNGCXk6k/XCqUFoyKJPI/AAAAAAAAtsc/xXakammeXQAlHhvGQp9I_UB9FnMLp02cwCLcBGAs/s640/RBA1.jpg" width="640" height="370" data-original-height="801" data-original-width="1383"></div>
<p> </p>
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<div>It was noteworthy to hear last week that the RBA has been watching the gross household debt-to-income ratio as a main point of concern, especially as <a href="http://petewargent.blogspot.com/2018/12/debt-ratio-revised-lower-now-falling" target="_blank">this ratio has already peaked and is now falling</a>. </div>
<div> </div>
<div>The distinction from <em>housing</em> debt-to-income was quite interesting (to me at least) as the lines between housing, small business, and personal credit are blurred at best, with small business loans often secured against a home, and so on. </div>
<div> </div>
<div>As you can see in the chart below, changes in the direction of housing credit growth have tended to lead changes in dwelling price growth. </div>
<div> </div>
<div>You can also see that no such change had occurred by the end of November 2018. </div>
<p> </p>
<div class="separator"><img src="https://1.bp.blogspot.com/-Dqi23bcB6-Q/XCqUHZwLEgI/AAAAAAAAtsg/RKoxndSCpVUL5OIvz-ZGLEb4G8XspSL5gCLcBGAs/s640/RBA3.jpg" width="640" height="378" data-original-height="795" data-original-width="1346"></div>
<p> </p>
<div>A simple credit impulse model as favoured by ANZ economists suggests that capital city (i.e. Sydney and Melbourne) dwelling price declines should moderate, although there are several factors unique to this cycle - not least the boom and bust in Chinese investors - that could throw the model a bit off course (this may have already happened to some extent since 2014). </div>
<p> </p>
<div class="separator"><img src="https://2.bp.blogspot.com/-hg19s7pQfzU/XCqUE6b5LmI/AAAAAAAAtsY/pvq8s6-v7MEhCHqgIJamHA7GeoF0vQUcQCLcBGAs/s640/RBA2.jpg" width="640" height="374" data-original-height="787" data-original-width="1341"></div>
<p> </p>
<div>Investor credit growth was already at the lowest level on record, and it fell to even lower levels last month, allowing APRA to remove another of its now-redundant arbitrary caps, this time on interest-only lending. </div>
<div> </div>
<div>Given the enormous growth in the population aged 25 to 34 in particular, this is now a remarkably low level of growth in investor credit, even if it did follow on from a boom. </div>
<div> </div>
<div class="separator"><img src="https://4.bp.blogspot.com/-LmCPOkyIAMs/XCqUDn5r1zI/AAAAAAAAtsU/43fTNK6yncENxThK3etijkbED9oHjaPAgCLcBGAs/s640/RBA.jpg" width="640" height="366" data-original-height="803" data-original-width="1402"></div>
<p> </p>
<div>Not surprisingly the growth in owner-occupier credit also declined for a ninth consecutive month.</div>
<div> </div>
<div>CoreLogic will release its latest home value index for the month of December, and this will show significant declines for Sydney and Melbourne in 2018.<br><br><strong><span style="text-decoration: underline;">The wrap</span></strong><br><br>In short, business credit was moderate, personal credit was negative, and housing credit has no pulse - let's hope that doesn't turn into a full-blown coronary.</div>
<div> </div>
<div>Happy New Year! </div>
<div> </div>
<div><em>PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and blogger.</em></div>
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2018 finishes with housing credit having no pulse: Pete Wargent

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<p>Banks will start sharing lending data ahead of comprehensive credit reporting from next July covering the entire financial system.</p>
<p>"Suddenly banks will discover when they have been hoodwinked by borrowers using multiple banks,"<em> The Australian</em> columnist Robert Gottliebsen warns.</p>
<p>"The bottom line is that bank lending for housing will fall further and so will prices in vulnerable areas."</p>
<p>His recent column noted the credit squeeze is already reducing dwelling prices and there is more to come.</p>
<p>The tough times in many areas of real estate (but not all) will continue until the squeeze is reversed, he wrote.</p>
<p>"At this stage there is no crash on the horizon.</p>
<p>"But those dwelling price falls will in time reduce consumer confidence and the price of shares in companies affected by consumer confidence."</p>
<p>Gottliebsen noted that Westpac was the most aggressive of lenders to housing investors.</p>
<p>He noted the fastest-growing area of loans was 'interest only' and Westpac led the pack.</p>
<p>"There has been a huge crackdown and these loans are being converted to interest-and-principal repayments."</p>
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Bank lending for housing will fall further after comprehensive credit reporting: Robert Gottliebsen

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<p><span>East coast residential developer Sunland reported a dip in net profit to $3.2 million but has reconfirmed full-year earnings of up to $29 million, given anticipated second-half property settlements.</span></p>
<p><span>Sunland managing director Sahba Abedian said he had also noticed a cyclical pull-back in bank lending for new properties.</span></p>
<p><span>"I do feel there is some adjustment taking place where banks are becoming more stringent on their lending, and that is in respect to lending to developers as well," Mr Abedian said. </span></p>
<p><span>"I think it is partly regulation, but I also feel they have a view to the cycle," the <em>Australian Financial Review</em> reported.</span></p>
<p><span>"Despite the prevailing headwinds, we continue to see opportunities in specific market segments in Brisbane, the Gold Coast and Sydney's northern beaches, and our recent acquisitions in these locations are expected to contribute to earnings growth in the short to medium term."</span></p>
<p><span>Sunland has a total of 855 contracts on hand with a combined value of $663 million, with an estimated 380 settlements during the second half of the year.</span></p>
<p><span>He said a sustained focus on operational efficiencies enabled the group to achieve an average return on development of 25 per cent, above a target of 20 per cent.</span></p>
<p><span> </span></p>
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Sunland secures 25 percent returns on its residential development

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<p><span>The rise of alternate funding may be the next big thing in developer financing following APRA's tightening oversight of banks, if we are to interpret recent commentary by Daniel Holden, director of construction finance group Holden Capital.</span></p>
<p><span>The pressure on major banks to meet capital adequacy levels under the Basil III accord has reduced their appetite for construction lending, says Holden in one of his posts. To achieve their objectives, banks have raised the bar for developers in terms of their pre-conditions, cut gearing levels and increased their pricing on debt, effectively implementing a flight to quality and leaving many of the their traditional but more marginal clients in terms of credit strength, looking for alternative funding sources, he says.</span></p>
<p><span>Record low interest rates have come as a boon then, encouraging developers to shift to alternate funding.</span></p>
<p><span>In FY15, Holden Capital settled 64% of its deals with the major banks but this quickly changed with 62% of the $300 million of project debt settling before Christmas likely to be set with alternative funding sources, a pre-Christmas post said.</span></p>
<p><span>While alternative funding sources may have some additional costs, they also come with distinct benefits to developers who do not want to be restricted in their ability to look for market opportunities due to constraints placed by traditional banks.</span></p>
<p><span>As an example, non-bank money can cost as low as 9-10% per annum, which when compared to the traditional bank cost on a medium sized projects of say 30 products, would add as little as $170,000 or 10% variance on normal finance costs to a project with a total cost of $6 million.</span></p>
<p><span>Alternative funding also offers a developer the potential for significant savings in other areas such as the chance to start the project without the need for pre-sales, unlike when approaching banks. The developer can lock in a construction price and reduce escalation risk as well as sell houses with a more certain delivery date, rather than the more speculative off the plan route required to meet banks' pre-sale criteria, Holden adds.</span></p>
<p><span>According to a case study by Holden Capital, bank and non-bank lenders have different requirements regarding loan ratios. Most non-bank lenders are so called gross realisation (GR) lenders and the main criterion for them is a loan to value ratio (LVR) of no more than 65%. Banks also require a maximum LVR of 65%, but in addition they impose a limit of no more than 80% of the total development cost (TDC).</span></p>
<p><span>The bank option benefits from a significantly lower total interest cost, but the non-bank alternative does not require the delay of between 3-6 months associated with the pre-sales requirement and benefits from a lower requirement on developer equity with the potential for a significantly increased return on investment.</span></p>
<p><span>Holden has also summarised the kind of developers best placed to succeed in this environment.</span></p>
<p><span>The 'Phoenix' developer, who were successful pre-GFC but rapidly declined during the GFC due to unfortunate dealings with their creditors but are now rising again Phoenix-like. Typically this type of developer is very experienced, but misjudged the state of the market and their level of exposure to it during the GFC, he says. Now they are back out there, wiser from experience and unlikely to make the same mistakes. They are more conservative with their own limited capital and looking for equity partners to leverage their position. Holden predicts that the 'Phoenix' developers will most likely be successful in the coming years.</span></p>
<p><span>The other is the cautious developer, who identifies risk upfront and finds ways to mitigate these as much as possible. They also realise that they don’t know everything, and won’t hesitate to utilise the skills of others, where there is a gap in their knowledge and skills base. In reality, they are the 'Smart Developer', he concludes.</span></p>
<p><span>According to Holden, Australia has a deep market of passive investors willing to take equity positions on development projects. In conclusion, developers could achieve much more if they use the right consultants and redirect their energy and time into enhancing their core skill sets, which would reflect in long-term success.</span></p>
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prateek24-ezbwHMbNAk

Non-bank financing may be a paradigm shift in construction lending

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<p>Westpac has decided to stop lending to offshore customers who are not citizens or residents of Australia with an eligible visa.</p>
<p>“It continues to be Westpac's priority to support Australian citizens and permanent residents (including applicable visa classes) living outside of Australia on their journey to own a home or investment property in Australia,” the bank said.</p>
<p>Effective immediately, changes to applicants earning foreign income policy will also occur.</p>
<p>For non-residents, no lending is permitted even if the applicant income is not relied on to meet serviceability, a letter to brokers obtained by Mortgage Business advised.</p>
<p>Local applications that include foreign income will be given a lower loan-to-value ratio of 70 per cent, down from 80 per cent. </p>
<div>
<p>The new policy from April 26 will apply to all loans that were pre-approved but have not been issued. </p>
</div>
<div>
<p>Last week developers said any withdrawal of bank lending could lead to a possible self-fulfilling fear of "apartment collapse". </p>
</div>
<p>"The problem is they [Chinese buyers] don't know how much the banks will give till the end," the Meriton boss Harry Triguboff said. </p>
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Westpac tightens residential lending to foreign buyers

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<div>
<p>Citi and ING Direct are both tightening the amount they will lend to property investors and owner-occupiers.</p>
<p>Citi has a confidential list of nearly 260 postcodes nationally that its 'high density unit policy' will apply.</p>
<p>The Australian Financial Review suggested high density is any unit development containing more than 30 units.</p>
<p>The bulk of the postcodes are in Melbourne, Sydney, surrounding inner suburbs and up to 15 kilometres from the central business districts.</p>
</div>
<div>It is more than double the number of postcodes that were revealed as being held on Macquarie Bank's similiar constraint list.</div>
<div>recently tightened lending requirements for.</div>
<div>
<p>Loan-to-value ratios will be reduced from 80 to 70 per cent.</p>
</div>
<div>ING Direct has new guidelines on apartment and units with an internal floor space of less than 60 square meters.</div>
<div> </div>
<div>Those with an internal floor space of less than 60 square metres – excluding balconies car spaces – and less than five years old will have a maximum loan-to-value ratio of 70 per cent.</div>
<div> </div>
<div>Apartments with an internal floor space between 50 and 60 square metres – excluding balconies and car spaces  - and older than five years will limit the maximum loan-to-value to 80 per cent.</div>
<div>
<p>Both lenders use broker networks to recommend their products.</p>
<p>Firstmac, a non-bank lender with about $8 billion under management, tightened lending for apartments in developments with more than six floors. It has excluded rental income as a source for servicing the mortgage.</p>
</div>
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jonathanchancellor-7SQnKwU6yx

ING Direct and Citi tighten lending policies on apartments

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<p>Westpac has begun an audit of all new and current building projects it is funding to make sure they comply with the building code amid concerns over flammable cladding used in construction.</p>
<p>Recently, a <a href="https://www.urban.com.au/news/75567-senate-panel-wants-total-ban-on-combustible-cladding-in-buildings" target="_blank">Senate report said flammable cladding</a> on buildings should be banned and an ABC’s Four Corners investigation showed thousands of buildings across Australia have used such material that led to the deadly Grenfell Tower fire in London. </p>
<p>In what it said was an initial step, Westpac has asked the developers of all its residential and commercial projects that are under way and planned to confirm the compliance of all external wall cladding products with the National Construction Code.</p>
<p>The move does not seek to confirm the compliance of buildings that are already completed – Westpac said it was too early to comment on past projects.</p>
<p>Westpac’s move reveals the concerns of financiers about the risks of combustible cladding on buildings, such as the fire at Melbourne's Lacrosse tower in 2014.</p>
<p>Recent concerns about non-compliant cladding had led the bank to introduce "additional processes", a Westpac spokesman was quoted as saying by The Australian Financial Review.</p>
<p>"In the first instance we are undertaking an audit by asking developers of new and current projects to provide confirmation of compliance on external wall cladding products that are either designed [to be installed], being installed or are already installed," he said.</p>
<p>Among the details sought are the manufacturer and type of product, how the product was to be used and whether the particular product complied with the building code for its intended installation and use.</p>
<p>"Where required, we will be seeking further confirmation from the relevant project consultants, including a statement from the building certifier, that the appropriate certification is in place or that appropriate measures are being sought," he said.</p>
<p>While concerns about combustible cladding are most immediate in residential buildings – where people sleep – audits by authorities across the country have revealed panels containing flammable filling such as polyethylene, in possible breach of the building code and fire safety regulations, on public buildings including Melbourne's AAMI Park stadium and the New Royal Adelaide Hospital.</p>
<p>Insurers are already warning that they may refuse cover on buildings with problematic cladding, or price it too high for strata corporations to afford.</p>
<p>This means lenders too will want to limit their exposure to buildings such as residential towers that do not comply.</p>
<p>For banks right now, cladding is similar to the risks of the Y2K bug that threatened to paralyse computer systems worldwide ahead of the date change to 2000 and they will be taking similar steps to reduce those risks, said Graham Montgomery, the executive chairman of mortgage broker Custom Equity Group.</p>
<p>"At that stage, every lending application had to include a questionnaire on the business side about details of their software, what programs they sued, were they backed up – a whole mirror to addressing an issue that never became an issue," Montgomery said.</p>
<p>"The banks were proactive and I can see that moving forward that's going to be that type of thing that starts to happen."</p>
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Cladding issue: Westpac auditing projects for compliance with safe building practices

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<p>For every one dollar earned, on average, Australians have nearly two dollars of debt. Australia has a household-debt-to-income ratio of 190 percent.</p>
<p>Much of this stems from a national obsession with buying real estate, according to the latest episode of ABC’s Four Corners, which discussed the forces driving the debt-fuelled housing boom and the risks it poses for the country.</p>
<p>Reported by Michael Brissenden and presented by Sarah Ferguson, the show brought together experts to map the danger zones in the housing market and lending practices that have driven the boom in residential lending and was critical of banks in the event of potential hard landing.</p>
<p>Banks have at least 60 per cent of their loans in the housing market, and concerns grow that a housing downturn could be disastrous for the Australian economy.</p>
<p>All the Big Four banks have defended their lending practices following the episode on ABC.</p>
<p>ANZ CEO Shayne Elliott, who was on the show, said ANZ's market share was a bit lower than the average but “I think that's not a healthy, that's a, it is a healthy mix at about 60%”.</p>
<p>He said the reality was that housing loans are pretty good because they're quite diverse in terms of lots of reality small loans across  the country.</p>
<p>Ferguson said while the regulators have recently forced banks to tighten up on lending - “experts in tonight's program say the legacy of loose, irresponsible lending has many years to run”.</p>
<p>Brissenden said a big part of the story was the role of brokers lenders and developers who encouraged people to borrow more than they could afford.</p>
<p>Citing the case of Carlene Stafford, who was convinced to borrow $445,000 to buy an investment property in Queensland.</p>
<p>Stafford said she received an unsolicited phone call one night and the first question was “did I own my own home? I said yes. Was I working? Yes”.</p>
<p>“And I had a call from a developer and he told me that he could help be get into an investment property that would assist me financially when I retired.”</p>
<p>To do that she used the equity in her almost paid off home.</p>
<p>Stafford, however, didn't know at the time was that even the banks own estimates on her financial commitments left her with $9.17 at the end of each month.</p>
<p>She said while the developer told her it was a risk-free investment, “the only person and only people that it was risk-free for was for the banks, for the bank, the ANZ Bank.”</p>
<p>“They've got nothing to lose. They've got the house up there. They've got my house here if necessary.”</p>
<p>Or they've got a couple 100,000 to be paid back once I sell this or die.</p>
<p>“So that goes out of my kids' inheritance.”</p>
<p>ANZ CEO Shayne Elliott travelled to Armadale, WA last week to meet and hear directly from Stafford.</p>
<p>ANZ said in a statement that Stafford agreed she was responsible for declaring her estimated expenses and advising ANZ about her financial position and the bank was not responsible for introducing her to either the developer or the broker.</p>
<p>Elliott did concede that Stafford had been targeted by aggressive sales tactics by both the developer and broker and the bank has agreed to a revised settlement with Stafford.</p>
<p>ANZ said it has hardship programs in place for customers who find themselves in unfortunate circumstances.</p>
<p>Both the Commonwealth Bank and NAB cited their commitment to the remuneration reform recommendations of independent expert, Stephen Sedgwick. </p>
<p>CBA said it will implement the recommendations to ensure remuneration structures are aligned to appropriate customer outcomes.</p>
<p>“Our employees, including lenders and managers, are measured on a balanced scorecard which includes customer-based and business performance measures,” it said in a statement.</p>
<p>Meanwhile, NAB said its staff have a balanced scorecard across both financial and non-financial objectives, including “delivering the right outcomes for customers”.</p>
<p>It said a vast majority of staff incentives have no direct link to product sales.</p>
<p>NAB said it had recently announced changes to its incentives program, effective 1 October, for its most senior branch and contact centre managers, which will see “greater emphasis placed on customer outcomes, actions and behaviours for staff incentives”.</p>
<p>Second-biggest mortgage lender Westpac said it was addressing the community’s feedback about product referral incentives.</p>
<p>“We were the first of the major banks to remove product-based incentives for our 3,300 tellers in our branch network, so they are now rewarded solely for providing quality customer service,” it said in a statement.</p>
<p>“We have also removed product-specific targets for personal bankers and will reward them equally for customer service and financial measures. These changes apply to all brands across the Westpac Group.”</p>
<p>It said Westpac Group home lenders are rewarded based on a number of factors including customer satisfaction and mortgage drawdowns, and subject to meeting risk and compliance measures.</p>
<p>While they provided a written repose, Brissenden added that “most bank CEOs were reluctant to speak to Four Corners”.</p>
<p>American economist Jonathan Tepper, who called out the Spanish housing crisis, said "bubbles really depend on loose credit, that's one of the things that's really fuelled the Australian housing market".</p>
<p>"Anyone with a pulse could essentially get a mortgage," he added.</p>
<p>"I go back to the analogy that I always use, which is insiders versus outsiders, right? If you're the insider, you're like the frog in the frying pan. The temperatures been turned up very slowly on you."</p>
<p>"If you're an outsider you might say, "Do you know what? That looks a bit too hot."</p>
<p>"I'm just the outsider sitting there telling people that the temperatures been turned up."</p>
<p>Brissenden said banks' exposure to mortgage risk has already caused some reassessments. In June, Moodys downgraded Australia's banks.</p>
<p>Frank Mirenzi of Moody's said "our concern is around the fact that you've got households holding more debt. That potentially makes them more vulnerable to a change in their circumstances, and if there's a shock to the economy, that potentially leads to a rise in sensitivity to the banking sector."</p>
<p>"The banks could in fact experience higher losses because households are more indebted."</p>
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