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Mortgage lending growth sinks to four-year low

by Charbel Kadib12 minute read
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Weakness in the residential lending space has persisted, with subdued investor activity continuing to serve as a drag on credit growth, new RBA data has revealed.

The latest Financial Aggregates data from the Reserve Bank of Australia (RBA) has reported housing credit growth of 0.2 per cent in the month ending 31 March 2019, down from 0.3 per cent growth in the previous month.

Housing credit grew 4 per cent in the 12 months to 31 March 2019, down from 6.1 per cent growth in the previous corresponding period.

Reflecting on the data, ANZ Research noted that the annual rate of housing credit growth was the slowest in four years.


The search groups stated that the weakness was primarily driven by flat investor lending activity.

“Housing credit growth remains soft, with investor finance growth flat for the second straight month, while owner-occupier finance continues to grow well below its recent historical average,” ANZ observed.

“The housing credit impulse fell further in March, consistent with further declines in house prices.”

ANZ Research expects subdued housing credit activity to persist.  

“We expect housing credit to continue to be weak, as tighter credit conditions (which led to the decline in house prices) pass through the system,” the research agency added.

However, business credit volumes improved both on a monthly and annual basis, with volumes rising by 0.5 per cent month-on-month (up from 0.3 per cent in February), and 4.9 per cent year-on-year (up from 4 per cent).

Personal finance volumes remained in negative territory, declining by 0.3 per cent on a monthly basis (0.1 per cent in February) and by 2.8 per cent in the 12 months to 31 March 2019 (down from 1.1 per cent).

Total credit growth remained stable month-on-month at 0.3 per cent but fell from 5 per cent in the 12 months to 31 March 2018 to 3.9 per cent in the year ending 31 March 2019.  

ANZ’s mortgage book falls $1.9 billion in March quarter

The release of the RBA’s data coincided with the publication of the Australian Prudential Regulation Authority’s (APRA) latest monthly banking statistics.

According to the prudential regulator’s data,  ANZ’s mortgage book contracted by $800 million in March, following on from declines of $400 million in February and $700 million in January.

Since the turn of the year, ANZ’s mortgage book has declined by a total of $1.9 billion, from $258.7 billion as at 31 December 2018 to $256.8 billion as at 31 March 2019.

The sharp fall has been mostly driven by a decline in investor lending, with the major bank’s investment portfolio dropping by $1.3 billion over the past quarter, from $79.7 billion to $78.4 billion.

ANZ’s owner-occupied book also fell sharply ($600 million) – albeit less pronounced than the reduction in investor lending – slipping from $179 billion as at 31 December 2018 to $178.4 billion.

ANZ CEO Shayne Elliott has acknowledged that credit tightening measures imposed by the lender off the back of scrutiny were “overly conservative”.

In March, Mr Elliott also told the House of Representatives’ standing committee on economics that, in his view, tighter lending standards triggered the overall downturn in the credit market.

The major bank will release its 2019 half year financial results (HY19) later today, which is expected to shed further light on ANZ’s mortgage market performance.

CBA still leading the pack

The latest APRA data has also revealed that the Commonwealth Bank of Australia (CBA) and its subsidiary Bankwest continue to outperform their major competitors in the home lending space.

CBA’s mortgage portfolio increased by $1.2 billion in March, from $428.6 billion to $429.8 billion, solely driven by growth in its owner-occupied book ($296.9 billion), while its investor portfolio remained stable at $132.9 billion.

Over the past quarter, CBA’s mortgage book has risen by $2.8 billion, from $427 billion as at 31 December 2018.  

Westpac and its subsidiaries (St.George Bank, Bank of Melbourne, and BankSA) also reported strong portfolio growth in March, with the group’s book increasing by $700 million, from $413.8 billion to $414.5 billion.

Like CBA, Westpac’s growth was solely driven by an increase in its owner-occupied book ($262.2 billion), with its investor portfolio remaining stable at $152.3 billion.

Over the three months to 31 March 2019, Westpac’s total portfolio rose by $1.4 billion, from $413.1 billion as at 31 December 2018.  

NAB reported mixed results in March, with a $100 million increase in its owner-occupied book ($155.8 billion) offset by a $300 million decline in its investor lending portfolio ($105.3 million).

NAB reported a net month-on-month decrease of $200 million in its total mortgage book, which fell from $261.3 billion to $261.1 billion.

However, over the past quarter, NAB’s total mortgage portfolio increased by $500 million, from $260.6 billion as at 31 March 2018.

 [Related: Banks urged to cut interest rates]

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Charbel Kadib


Charbel Kadib is the news editor on The Adviser and Mortgage Business.

Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.

Email Charbel on: [email protected]

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