Eagle-eyed investors would be watching the Graincorp Ltd (ASX: GNC) share price right now.

Shares in the Aussie commodities business have been surging higher in 2021 and the past year more broadly. The Graincorp share price was swapping hands for $6.50 at Wednesday’s close of trade.

So, what’s helping propel the Aussie grain business’ valuation to its current level?

What’s driving the Graincorp share price?

Graincorp’s core business is in the receipt, storage and management of grain and related commodities. The Aussie company currently boasts a market capitalisation of $1.5 billion and is trading just shy of a 52-week high.

Perhaps the most surprising thing is the company’s price to earnings (P/E) ratio. Graincorp’s current P/E ratio is 277.8 times earnings — an astonishing valuation.

The Graincorp share price has rocketed 68% higher in the last 12 months on the back of strong profitability and earnings growth. Unlike many other ASX companies, Graincorp reports on a May (half-year) and November (full-year) reporting cycle.

That means we didn’t get to see the latest results from the group during the August reporting season just gone. We did, however, get a guidance upgrade from the Aussie company last month.

Looking ahead

Graincorp has upped its FY21 underlying earnings before interest, tax, depreciation and amortisation (EBITDA) and net profit after tax (NPAT). The Aussie commodities group was previously expecting underlying EBITDA of $255 million to $285 million with underlying NPAT of $80 million to $105 million.

Underlying EBITDA is now expected to hit $310 million to $330 million with underlying NPAT coming in at $125 million to $140 million.

The significant expected earnings bump saw the Graincorp share price surge higher in August. It comes after strong performance from the company’s east coast Australian grains business amid a strong harvest season.

It’s good news for shareholders following on from a solid half-year result in May.

The Graincorp share price is now up 51.9% year-to-date and trading just shy of its $6.54 per share 52-week high.

The post Up 65% in the past year: What’s happening with the Graincorp (ASX:GNC) share price? appeared first on The Motley Fool Australia.

More reading

• ASX 200 shares in this sector could be poised to boom in the coming year
• Top brokers name 3 ASX shares to buy next week

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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All eyes are on ASX uranium shares today as the commodity’s spot price continues to rise amid a new international deal for nuclear-powered submarines.

The price of uranium – a commodity needed to fuel nuclear reactors – has been soaring in recent weeks.

According to data from CNBC, the price of uranium has gained more than 60% since this time last month.

As a result, ASX uranium stocks including Deep Yellow Limited (ASX: DYL), Paladin Energy Ltd (ASX: PDN), and Energy Resources of Australia Limited (ASX: ERA), are on watch today.

What’s causing the price of uranium to surge?

The price of uranium has been soaring in recent weeks, driving up the share prices of many ASX uranium shares.

S&P Global Platts reports the price of uranium is being driven higher by funds, investors, and producers increasing their holdings in the commodity.

The publication notes some partakers in uranium-buying believe there’s a lack of supply. It also states some investors are enthused by nuclear’s potential as an energy source in the age of climate change.

The increased prices, demand, and funds’ buying the material to hold will likely bolster uranium production. It would also be good news for ASX uranium fans.

Additionally, ASX uranium enthusiasts’ interest may be peaked by a new pact between Australia, the United States, and the United Kingdom. The security partnership, named AUKUS, aims to see nuclear-powered submarines navigating Australian waters.

As ABC News has reported today, under the AUKUS pact, Australia’s submarines and their diesel-electric motors will be replaced with nuclear-powered counterparts.

The United Kingdom’s Prime Minister, Boris Johnson, was clear in saying the submarines will not be equipped with nuclear weapons.

The talk of nuclear power in Australia might boost investors’ sentiment of the uranium sector today. However, no companies have announced their involvement in the new submarines.

How are ASX uranium shares performing lately?

So far, the Deep Yellow share price has gained a massive 88% over the last 30 days.

Paladin’s stock is besting that figure, boasting a 113% gain for the same period.

Finally, the Energy Resources of Australia share price is currently 70% higher than it was this time last month.

The post Why are ASX uranium shares in focus today? appeared first on The Motley Fool Australia.

More reading

• Which ASX 300 shares are on the move mid-week?
• Here’s why the Deep Yellow (ASX:DYL) share price is up 50% this month
• Why Energy Resources of Australia, Incitec Pivot, Sydney Airport, & Talga are rising
• Up another 13%, the Paladin Energy (ASX:PDN) share price keeps on rallying. Here’s why.
• Deep Yellow (ASX:DYL) share price surges 24% to record highs

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price is on watch during Thursday’s session after the company released an investor briefing before the market open.

The briefing is concentrated on the banking giant’s ESG approach, and how it is complying with the push towards a sustainable and diverse business model.

ANZ’s share price closed at $27.61 yesterday, and therefore it is on watch after the release of this ESG briefing.

Let’s investigate a little further.

What did ANZ announce in its ESG update?

ANZ gave a comprehensive overview of its ESG framework, and how ESG factors are embedded into its operations.

The bank went into great detail into each framework of the ESG criterium – Environmental, Sustainability and Governance – and how it ticks the boxes for each of these headings.

For instance, ANZ has “funded and facilitated $14 billion towards sustainable finance”, and has completed 55 transactions in its “sustainable finance business” so far in FY21. The transaction volume on these deals is $91 million – definitely no small change.

Another interesting takeout from the briefing was the bank’s posture on risk, and its newly formed “risk appetite statement (RAS)”.

This is basically a document that states the “degree of risk that ANZ is willing to take”, and a “process for monitoring compliance”, amongst others.

As such, its assessment of risk now extends to climate risk, biodiversity in environmental sustainability, cyber scamming and economic disparity, as per the release.

The banking giant then gave a series of case examples in its presentation on each of the subsections under the ESG banner, before establishing its future ESG targets.

It intends to “support 10 of the 17 United Nations sustainable development goals”, ranging from environmental sustainability to fair and responsible banking.

A big part of its plan to beef up ESG principles in house is ANZ’s policies on disclosure, and this came through in the briefing. ANZ outlined its disclosure process, and demonstrated the extent of its transparency, particularly on ESG measures.

The presentation concludes on a similar theme, and investors wanting to find out more on ANZ’s ESG policies, disclosures, or annual review of the same can head to the last page (page 50) of ANZ’s report and click the links found there.

ANZ share price snapshot

The ANZ share price has had an interesting year and has posted a gain of 22% this year to date. This extends the return over the past 12 months to 60%.

Both of these results have outpaced the S&P/ASX 200 index (ASX: XJO)’s climb of around 25% over the past year.

The post ANZ (ASX:ANZ) share price on watch following ESG update appeared first on The Motley Fool Australia.

More reading

• Could liar loans crash the housing market?
• How these 4 ASX 200 bank shares have performed since reporting results
• Leading brokers name 3 ASX shares to sell today
• The CBA (ASX:CBA) share price is underperforming its big four peers today
• This analyst sees 25% upside for the ANZ (ASX:ANZ) share price

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Newcrest Mining Ltd (ASX: NCM) share price has been under pressure this year. Shares in the Aussie gold miner have slumped 9% lower in 2021 despite strong gains for other ASX resources shares.

What’s going on with this S&P/ASX 20 Index (ASX: XTL) constituent right now and why is it under pressure?

Why the Newcrest share price is struggling in 2021

Newcrest is primarily a gold and copper miner, and a large one at that. According to the group’s recent FY21 results, Newcrest produced 2.1 million tonnes of gold and 142.7 thousand tonnes of copper last year.

It’s perhaps surprising to see the Newcrest share price struggle given the strong realised prices seen in FY21. Newcrest’s realised gold price jumped 17% to US$1,796 per ounce while copper prices were up 42% to US$3.66 per pound.

Group revenue climbed 17% in FY21 to $4.6 billion with earnings before interest, taxes, depreciation, and amortisation (EBITDA) up 33% to $2.4 billion. That helped Newcrest post record free cash flow in FY21 of $1.1 billion.

Those strong headline numbers weren’t enough to arrest the recent Newcrest share price slump. Shares in the Aussie gold miner have been sliding lower since the middle of the year.

Gold prices and market expectations could help explain the recent valuation slump. A large proportion of Aussie gold miners have seen their share prices fall in the last year.

In fact, it’s hard to find many S&P/All Ordinaries Gold Index (ASX: XGD) companies that are seeing strong gains. That sub-sector index has seen double-digit declines in 2021 as expectations for a continued gold rally have subsided.

There has also been the supply-side factors with a number of miners ramping up capacity and production in anticipation of sustained higher prices.

The Newcrest share price has remained under pressure in 2021. However, the Aussie miner still remains one of Australia’s largest listed companies with a market capitalisation in excess of $20 billion.

The post Why is the Newcrest (ASX:NCM) share price struggling in 2021? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• The Newcrest Mining (ASX:NCM) share price is down 4% since reporting
• Is worst over for ASX gold shares as Macquarie upgrades sector?
• 5 things to watch on the ASX 200 on Monday
• How have ASX resources shares performed during the August 2021 earnings season?

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Xero Limited (ASX: XRO) shares have been outperforming for years. Part of the exclusive ‘WAAAX‘ group of Aussie tech companies, Xero has gone from strength to strength.

In fact, the ASX tech darling has climbed 60.5% higher in the past year and now boasts a market capitalisation of over $22 billion.

So, what would a $10,000 investment in Xero shares just 5 years ago look like today?

What would $10,000 in Xero shares 5 years ago be worth today?

On 16 September 2016, Xero shares were trading at $19.33 per share. That means a $10,000 lump sum would net an investor a tidy 517 shares.

The continued bull run in tech shares in the intervening shares means those 517 shares would be worth a tidy amount today. Shares in the Aussie tech group closed at $148.73 per share on Wednesday representing a 669.4% gain in the last 5 years.

That means those 517 shares would be worth a handy $76,893.41 in today’s dollars if that hypothetical investor was still holding today.

What’s driving the recent share price gains?

Xero shares currently trade at an astonishing price to earnings (P/E) ratio of 1,250 times. That reflects the incredible growth that investors are expecting from the Kiwi cloud accounting software group.

Interestingly, Xero has actually underperformed the S&P/ASX 200 Index (ASX: XJO) in 2021. Xero shares have edged just 0.2% higher this calendar year while the broad market index has added 11% to 7,417.0 points.

The high valuation multiples could have investors wondering what’s next for the company’s share price. However, at least one broker sees more upside in Xero shares.

A recent note from Goldman Sachs was slapped with a ‘buy’ rating and a $165 per share price target. Strong subscriber growth and monetisation of Xero’s user base were noted as a couple of factors supporting that outlook.

Foolish takeaway

Xero shares have struggled to climb higher in 2021 but are still up 669.4% in the last 5 years. That is some impressive growth for the WAAAX share and its investors.

The post What $10,000 invested in Xero (ASX:XRO) shares 5 years ago would be worth today appeared first on The Motley Fool Australia.

More reading

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• Is the Xero (ASX:XRO) share price heading to $165?
• ASX 200 tech shares are dragging the market on Monday
• Why Appen (ASX:APX) and this ASX growth share could be buys

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Xero. The Motley Fool Australia owns shares of and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Lynas Rare Earths Ltd (ASX: LYC) share price has been on fire this year. Shares in the Aussie rare earths producer are up 86.4% year-to-date after closing at $7.79 per share on Wednesday.

So, what’s driving this Aussie resources share higher in 2021?

Why the Lynas share price is up 86% in 2021

Let’s start with what Lynas actually does. The Aussie company is the second largest producer of rare earths globally and the only significant producer outside of China.

Lynas focuses on the entire rare earths life cycle from mining through to customer delivery.

The Lynas share price has been on fire this year bar a one-week period in August where the group’s value slumped 18% in a week. That came as part of a broader resources sector correction after Lynas was trading near a 52-week high.

Lynas’ full-year results drew a muted reaction from the market. The Lynas share price fell lower on August 27 despite the rare earths miner’s record profit announcement.

Lynas posted a 60% increase in revenue to $489 million with net profit after tax of $157.1 million. The group’s earnings before interest taxes, depreciation and amortisation (EBITDA) jumped 294% to $235.3 million.

The strong profitability and Lynas share price growth have largely gone hand in hand. Rare earths and lithium shares have performed well in 2021 driven by supply-side disruptions, soaring demand and subsequently soaring prices.

That’s been good news for shareholders who have watched Lynas shares continue to climb higher in recent months. In fact, recent gains mean the Lynas share price is now up more than 200% in the past 12 months with a market capitalisation in excess of $7 billion.

Foolish takeaway

Lynas shares are sitting at $7.79 per share as at Wednesday’s close, threatening the group’s $7.82 52-week high.

The post Why the Lynas (ASX:LYC) share price is up 86% in 2021 appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX shares today
• ASX 200 energy and materials shares are leading the market on Monday
• Materials sector lagged the ASX 200 on Tuesday
• The Lynas Rare Earths (ASX:LYC) share price is soaring 4% on Tuesday
• The materials sector is leading ASX 200 shares today

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The QBE Insurance Group Ltd (ASX: QBE) share price has been out of form over the past month.

The insurance giant hasn’t released any market-sensitive news since announcing its fixed-rate resetting subordinated notes last week.

Wednesday’s market close added another 2.09% loss for the month, bringing QBE shares down a total of 6.84%.

Let’s take a look at what could be dragging the company’s shares lower.

What’s dragging QBE shares lower?

There are a couple of possible catalysts as to why the QBE share price has sagged in recent times.

Firstly, when QBE reported its half-year scorecard to the market, its shares accelerated to a 52-week high of $12.72.

The group highlighted a material turnaround in both underwriting and investment returns underpinned by strong profit growth. This led to an improvement in the company’s bottom line, recording a cash surplus.

Investors reacted positively to the news, sending QBE shares 8% higher on the day of the announcement. However, the share price boost was short-lived, as investors appear to be indulging in some profit-taking in the aftermath. The company’s shares are now trading at levels experienced before QBE published its bi-annual results.

Another reason which might be weighing on the QBE share price is a broker note from Goldman Sachs.

The multinational investment firm slapped a buy rating on QBE shares with a 12-month price target of $13.41. But some downside risks remain which could affect its shares for the second half of FY21.

These include the execution of efficiency programs being more difficult in the current market. The scope for recent rate increases may also reduce given COVID-19 economic headwinds.

Additionally, the broker pointed to an above-average catastrophe season expected in the Northern Hemisphere, and uncertain conditions in the Australian housing market.

QBE share price snapshot

While it has been a tough time this month, QBE shares are up around 26% since this time last year. In 2021, its shares have outpaced the S&P/ASX 200 Index (ASX: XJO) by 25% to register a gain of 37%.

Ranked as the 26th largest company on the ASX, QBE presides a market capitalisation of roughly $17.3 billion.

The post The QBE (ASX:QBE) share price has slumped 6% in 4 weeks. What’s happening? appeared first on The Motley Fool Australia.

More reading

• Top broker says QBE (ASX:QBE) share price is a buy
• 10 ASX shares we’re overweight in right now: fund

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Telstra Corporation Ltd (ASX: TLS) share price will be one to watch on Thursday.

This follows the release of its highly anticipated Strategy for the Future investor day update this morning.

What did Telstra announce?

With the very successful T22 strategy drawing to a close next year, the telco giant isn’t resting on its laurels.

This morning Telstra has unveiled the T25 strategy that it believes will take the company forward.

According to the release, commencing on 1 July 2022, T25 will be built on four strategic pillars. These are aiming to deliver an exceptional customer experience, leading network and technology solutions that deliver the future, sustained growth and value for shareholders, and the place you want to work.

Telstra’s CEO, Andrew Penn, highlighted that T22 was based on transforming the company, whereas T25 will be about driving growth.

He commented: “T22 has been one of the largest, fastest and most ambitious transformations of a telco globally and today we are a vastly different company. This means we are poised for growth as our society and economy increasingly digitises and we all work, study, transact and get our entertainment online. These fundamental shifts, together with T25, will underpin our future growth and shareholder value.”

“If T22 was a strategy of necessity, T25 is a strategy for growth,” said Mr Penn.

What is included in T25?

The company notes that T25 aims to provide a range of benefits.

This includes consumer and small business customers receiving exceptional customer experiences as telco, energy, and tech products and services are personalised and localised for individual customers using predictive analysis.

In addition, enterprise customers will have access to Australia’s largest one-stop-service shop, providing a range of managed and consulting services, telco products, and inhouse expertise of Telstra Purple to help customers digitally transform and grow.

The company isn’t forgetting about its regional customers. It intends to expand its regional coverage by 100,000 sq km of new 4G and 5G coverage, extending its network reach even further.

What about shareholders?

The good news for shareholders and the Telstra share price is that the company also has some bold growth targets.

Telstra revealed that it will aim for sustained growth and value by targeting mid-single digit underlying EBITDA and high-teens underlying earnings per share compound annual growth rates (CAGR) from FY21 to FY25.

T25 also aims to deliver $500 million of net cost reductions, cash conversion and generation, active portfolio management, and shareholder value through an updated capital management framework.

This is expected to support its dividend payments and even allow for a long-awaited dividend increase in the future.

It commented: “Telstra’s updated capital management framework, effective from today, includes principles to maximise fully-franked dividends and seek to grow them over time, to invest for growth and to return excess cash to shareholders.”

From transformation to growth

Mr Penn concluded by reiterating that T25 marks its transition from transformation to growth.

He commented: “Through T22 we have set the foundation for our future success. We have simplified our operations and products, improved customer experience and reduced our cost base and our InfraCo plans are well progressed, helping us deliver value to shareholders. While T22 has been a success, we have more to do. We are determined to finish the job.”

“Today’s announcement of T25 marks our transition from transformation to growth, from a strategy we had to do, to a strategy we want to do to focus on growth. It is a strategy that builds on the strong foundations we have built over the last three years and remains focussed on what matters most – our customers, our people, our shareholders and on supporting the creation of a vibrant digital economy for Australia,” he added.

Is the Telstra share price in the buy zone?

According to a note out of Goldman Sachs this week, its analysts believe the Telstra share price is good value.

The broker has a buy rating and $4.40 price target on its shares. As a comparison, the Telstra share price is current fetching $3.93. This suggests there is almost 12% upside for the company’s shares.

The post Telstra (ASX:TLS) share price on watch after unveiling its T25 strategy appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Here are the 3 most heavily traded ASX 200 shares so far today
• Why this broker sees 11% upside in the Telstra (ASX:TLS) share price
• Leading brokers name 3 ASX shares to buy today
• What to watch at the Telstra (ASX:TLS) Strategy for the Future event this week

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If you’re a fan of growth shares then you may want to look at the shares listed below.

These companies have been growing at a solid rate and have been tipped to continue doing so in the future.

Here’s why they are rated as buys:

Bapcor Ltd (ASX: BAP)

The first ASX growth share to look at is Bapcor. It is the Asia Pacific region’s leading provider of vehicle parts, accessories, equipment, service and solutions.

Bapcor was a very strong performer in FY 2021. Last month it released its full year results and reported a 20.4% increase in revenue to $1,761.7 million and a 46.5% jump in pro forma net profit after tax to $130.1 million.

Management advised that this was underpinned by increased demand from consumers, which drove solid growth across the business. In fact, each of Bapcor’s business segments delivered an increase in both revenue and earnings during the 12 months.

Looking ahead, management’s guidance for FY 2022 was a touch on the cautious side due to lockdowns. However, beyond this, the company’s outlook looks very positive thanks to its strong market position and bold growth plans.

It is for these reasons that the team at Credit Suisse remain positive on Bapcor. So much so, the broker has an outperform rating and $9.20 price target on the company’s shares.

Xero Limited (ASX: XRO)

Another ASX growth share to consider buying is Xero. It is a leading cloud-based business and accounting software provider with a focus on small to medium sized businesses.

Over the last few years, the Xero platform has evolved from a simple accounting solution into a full service small business solution. This has led to millions of small to medium sized businesses globally subscribing and running their businesses through its platform, which has underpinned strong revenue and profit growth.

For example, in FY 2021, Xero reported an 18% increase in revenue to NZ$848.8 million and a 39% jump in EBITDA to NZ$191.2 million.

Looking ahead, Xero still has a massive growth runway. This is being driven by the ongoing shift to cloud solutions, its international expansion, and its burgeoning app ecosystem.

Goldman Sachs is very positive on its future. In light of this, it recently retained its buy rating and $165.00 price target on the company’s shares.

The post 2 growing ASX shares that analysts rate as buys appeared first on The Motley Fool Australia.

More reading

• 2 ASX shares that won’t stay cheap: fund manager
• Is the Xero (ASX:XRO) share price heading to $165?
• ASX 200 tech shares are dragging the market on Monday
• Why Appen (ASX:APX) and this ASX growth share could be buys
• 3 excellent ASX 200 (ASX:XJO) shares that could be buys

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Xero. The Motley Fool Australia owns shares of and has recommended Bapcor and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Australian housing market is in focus after a report that the number of ‘liar loans’ are increasing. Could this crash the housing market?

Australia’s housing generates a lot of economic activity across a broad range of industries, including on the ASX.

Some of the ASX’s biggest businesses, the major banks, are heavily involved with property. This refers to Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group Ltd (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB). Mortgages make up a large amount of the loan book which can be seen in CBA’s FY21 result presentation (and the others).

Other ASX banks also have a very sizeable exposure to the housing market like Bank of Queensland Limited (ASX: BOQ), Suncorp Group Ltd (ASX: SUN), Bendigo and Adelaide Bank Ltd (ASX: BEN), Macquarie Group Ltd (ASX: MQG) and MyState Limited (ASX: MYS).

There are also property portal websites and mortgage brokers like REA Group Limited (ASX: REA), Domain Holdings Australia Ltd (ASX: DHG) and Australian Finance Group Ltd (ASX: AFG).

The housing market also provides fuel for plenty of businesses that supply building supplies or household items for customers. Some of the many examples include Wesfarmers Ltd (ASX: WES), Metcash Limited (ASX: MTS), Brickworks Limited (ASX: BKW), CSR Ltd (ASX: CSR), Nick Scali Limited (ASX: NCK), Harvey Norman Holdings Limited (ASX: HVN), JB Hi-Fi Limited (ASX: JBH) and so on.

So, the health, strength and sustainability of the housing market has far-reaching impacts.

What is happening with ‘liar loans’?

According to the latest survey done by the investment bank UBS, there is now a record number of liar loans, as reported by various media including the ABC.

Of the approximately 900 people that took on a mortgage over the last 12 months, just over 40% of these applications “were not completely factually accurate”.

Readers may wish to know that this is the highest level of ‘liar loans’ since UBS started doing this survey and analysing the result in 2015 (when liar loans made up 27% of the total). Last year the percentage was 38%.

Allegedly, the things that people were most ‘not entirely truthful’ about were: not disclosing their full living costs (just over a third), not fully disclosing financial commitments (at 28%) and including rosier-than-reality income figures (at 22%).

According to the ABC, UBS said that the debt-to-income ratio on mortgages was a record. The stats show that 21.5% of loans were to people that had a debt to income ratio of at least six times. UBS said:

Amid home prices booming 18.3 per cent year-on-year (highest since 1989), we think borrowers are ‘chasing the market’ and stretching towards their capacity limit to be able to qualify.

The status also showed that property investors were more likely to spruce up their application (above 50%) compared to people who were buying to live in the property (31%).

How is the housing market going?

Time will tell if this has an impact on borrowers have overstretched themselves or the market as a whole. It will also be interesting to see if the regulators decide to step in or not at some point. There is not much talk of Australian Prudential Regulation Authority (APRA) or the Reserve Bank of Australia (RBA) doing anything for now.

The latest CoreLogic national home value index showed that national prices climbed 1.5% over August 2021 and the prior 12 months showed a 18.4% increase of property prices.

The post Could liar loans crash the housing market? appeared first on The Motley Fool Australia.

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• Why this broker sees the Westpac (ASX:WBC) share price hitting $30
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Brickworks. The Motley Fool Australia owns shares of and has recommended Brickworks, Macquarie Group Limited, and Wesfarmers Limited. The Motley Fool Australia has recommended Harvey Norman Holdings Ltd. and REA Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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