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Banks report $11.2bn bounce in mortgages

by Charbel Kadib10 minute read

Owner-occupiers have driven a 12 per cent spike in home loans settled by Australia’s ADI sector, according to new data from APRA.

The Australian Prudential Regulation Authority (APRA) has released its latest property exposure statistics for the December quarter of 2019, reporting a 12 per cent increase in the value of new housing loans settled by authorised deposit-taking institutions (ADIs).

Banks settled approximately $106.5 billion in housing loans over the quarter, up from $95.3 billion in the three months to September 2019, marking the third quarterly increase in volumes.

Of the new loans settled, the third-party channel originated $53.4 billion, up from $48.2 billion.


Owner-occupiers drove the increase in new housing loans, with the value of owner-occupied loans settled over the quarter increasing to $71.9 billion, up by $8 billion from $63.9 billion.

Investor volumes also increased, albeit less pronounced, rising by $3.4 billion, from $28.5 billion to $31.9 billion.

Interest-only volumes recovered after declining in the previous quarter, rising from $17.3 billion to $18.7 billion.

The increase in overall volumes followed the Reserve Bank of Australia’s (RBA) first three cuts to the cash rate and the removal of APRA’s 7 per cent interest rate floor for home loan serviceability assessments.

For the first time, APRA’s property exposure statistics include interest rate and assessment rate trends that contributed to the rise in demand for housing finance.

According to the data, the weighted variable rate for new home loans funded over the December quarter dropped to 3.4 per cent, down from 3.6 per cent in the previous quarter, and from 4.2 per cent prior to the RBA’s first cut to the cash rate in June.

Moreover, the weighted average serviceability assessment rate fell to 6.3 per cent, down by 1 percentage point from 7.3 per cent prior to APRA’s removal of the minimum interest rate floor.

APRA has also released the latest version of its quarterly ADI statistics, revealing that the ADI sector’s collective earnings took a hit over the December quarter, despite the sharp uptick in home lending volumes.

According to APRA’s figures, the ADI sector’s collective net profit after tax (NPAT) slipped by 5.4 per cent year-on-year, from $35.7 billion to $33.8 billion.

[Related: Majors recover lost ground in business space, volumes slide]

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