Bad Credit Mortgage Lender

Australia's CBA H2 earnings may rise 15 percent

SYDNEY, Aug 4 (Reuters) - Commonwealth Bank of Australia Ltd. (CBA) , Australia's biggest mortgage lender, is expected to report a 15 percent rise in second-half earnings on Wednesday on stronger lending, but growth may slow in fiscal 2007.

Australian banks are benefiting from 15 years of economic growth and a 30-year low in unemployment that have fuelled demand for credit and kept a tight lid on bad debts, but borrowing costs have risen on the back of higher interest rates.

The country's central bank increased its key interest rate to 6 percent this week -- the highest level since early 2001 and the second rate rise this year -- and raised its inflation forecast on Friday, fuelling speculation of a third rise later this year.

Analysts said commercial banks' profit margins would improve as they passed on the full rate rise to their loan customers and kept transaction accounts largely unchanged, but a longer term risk of rising rates was slower growth and more troubled loans.

SUB PRIME LENDER SEES BAD DEBTS DOUBLE IN A YEAR

Bloomberg has reported that bad debts doubling at the (mainly sub-prime) lender Kensignton mortgages has caused an 11 percent drop in their share price in early morning trading.

Mortgage lender Kensington Group's shares plunged 11pc this morning after it warned that bad debts doubled in the first half of the year and that it was suffering from increased competition.

Bad debts at the company, which lends to borrowers with below-average credit records, jumped to 24.5m in the six months to May 31, from 11.3m a year earlier.

Chief executive John Maltby said: "We do not expect market conditions to get any easier during the rest of the year." Kensington shares fell 118 to 910p in early trading.

Stuart Duncan, a London-based analyst at Numis Securities who has a "sell" rating on the stock, said: "There has been a big jump in the bad debt charge.

Mortgage lending reaches new high

New figures show that gross mortgage lending rose to a new record high of £32.2 billion last month, up from £25.7 billion in June last year. The Council of Mortgage Lenders (CML) statistics demonstrate strong consumer demand for the whole range of homeowner loans, including bad credit mortgages and lifetime mortgages. May had also been a record month for the market, with gross mortgage lending reaching £29.1 billion. The 11 per cent monthly rise in June was widely expected because it is traditionally the month when the financial aspect of spring buying activity kicks in. "Today's figure reflects the seasonal rise in house buying, strong house price growth and high levels of remortgaging activity," said the CML's director general, Michael Coogan. He also noted that particular strength in London was also adding to the overall picture and predicted high lending figures in the coming months.

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