The share of new home loans originated by the third-party channel has spiked against a backdrop of a 16.4 per cent fall in overall volumes settled by banks, new APRA statistics have revealed.
The latest quarterly property exposures statistics from the Australian Prudential Regulation Authority (APRA) have revealed that the share of third-party originated loans approved by authorised deposit-taking institutions (ADIs) with a loan book of over $1 billion increased to 50 per cent in the three months ending 31 March 2019, up from 49.7 per cent in same period last year.
This follows the release of data collected by CoreLogic business Comparator for the Mortgage and Finance Association of Australia (MFAA), which reported that broker share of the overall mortgage market (banks and non-banks) increased to a record high of 56.8 per cent for the December quarter.
However, the APRA data revealed that despite an increase in the share of new third-party originated loans, the overall value of such loans fell by 16 per cent ($6.9 billion), from $43.1 billion in the March quarter of 2018 to $36.2 billion.
The decline in the value of third-party originated loans coincided with an overall decline of 16.4 per cent ($14.3 billion) in new loans approved by ADIs, from $86.7 billion in the three months ending 31 March 2018 to $72.4 billion.
The overall slide in the value of new home loans was driven by a 15.2 per cent ($9.2 billion) drop in the value of new owner-occupied home loans, from $60.2 billion in the March quarter of 2018 to $51.1 billion.
The value of new investment home loans also fell, down 8.7 per cent ($5.1 billion), from $26.4 billion to $21.3 billion over the same period.
The APRA data also reflects a continued tightening in the risk appetite of ADIs, with the value of new interest-only loans falling by 21.3 per cent ($2.9 billion), from $13.6 billion to $10.7 billion.
Further, the value of new loans approved outside serviceability declined by 26.1 per cent ($1.1 billion), from $4.2 billion to $3.1 billion as at 31 March 2019.
The value of new low-doc loans also fell sharply, dropping by 60.8 per cent ($137 million), from $225 million to $88 million.
The total value of Australia’s residential mortgage book (excluding non-banks) increased by 4.4 per cent ($7 billion), from $1.59 trillion to $1.66 trillion.
Bank profits slide
APRA has also released its quarterly ADFI institution performance statistics, which revealed that the collective net profit after tax for Australia’s banks fell by 12.6 per cent ($1 billion), from $8.31 billion in the March quarter of 2018 to $7.26 billion in the March quarter of 2019.
When assessed on an annual basis, the collective net profit after tax of Australia’s ADIs dropped by 4.1 per cent ($1.6 billion), from $36.1 billion in the 12 months ending 31 March 2018 to $34.5 billion in the 12 months ending 31 March 2019.
The annual profit fall was sparked by a 2.9 per cent ($3.2 billion) decline in total operating income, from $109.2 billion to $106 billion.
Total operating expenses also increased, up 2.8 per cent ($1.5 billion), from $52.5 billion to $54 billion.