Growth in investment lending continues to slow

by Julia Corderoy11 Jan 2016
Loans to property investors rose over November, however, the annual growth in investment loans has continued to slow. 

The total value of property investment lending by Australian banks rose slightly to $517.4 billion in November, according to the Australian Prudential Regulation Authority’s (APRA) latest monthly banking statistics. This is an 0.14% increase from October, which recorded the lowest amount of investment lending by the banks since February 2015.

In the year to November 2015, however, the growth in investment lending slowed even further. The annual growth in investment lending remained well below APRA’s 10% annual growth guideline, increasing by just 3.32% following a 4% year-on-year rise in October.

According to APRA’s figures, three out of the four major banks were able to curtail their investment lending enough to remain below the annual growth guideline. The National Australia Bank (NAB) was the only exception, growing its investment loan book by $10.06 billion and recording year-on-year growth of 12%. 

Westpac, on the other hand, was the only major bank to decrease lending to investors year-on-year. Loans to investors from the major bank dropped 8% over the year to November, with the value of lending down $12.14 billion from November 2014. 

However, it should be noted that Westpac still holds the biggest share of loans to property investors in the Australian banking market, with the value of its investment loan book sitting at $135.37 billion – 6% higher than the second biggest lender to investors, the Commonwealth Bank of Australian (CBA) and 42% more than NAB.

CBA wrote a value of $5.96 billion in loans to property investors over the year to November 2015, growing its investment book by 4.9%. The Australia and New Zealand Banking Group (ANZ) increased the value of its investment portfolio by 6% year-on-year, settling a value of $4.72 billion in loans to investors.

AMP, which controversially left the investment market in July before announcing its return in November, decreased the value of investment loan book by 2% in November after settling $56 billion of investment loans less than October. Over the year to November, the non-major increased its investment loan book by 5.9%. 

The total value of lending to owner-occupiers by Australian banks increased by 1.2% over the month of November and 12% over the year to November.
 

COMMENTS

  • by Brado 11/01/2016 12:54:21 PM

    So none of those lender were anywhere near their 10% 'limit'... We may well see investment rates fall to attract more business... Or are the banks happy to be making more profit of smaller loan increases anyway?