Major expects turnaround in home lending

by Madison Utley19 Aug 2019

In its third quarter update given last week, a major bank expressed optimism regarding the future growth of its residential lending portfolio, having instituted several measures to address issues which have been negatively impacting the business. 

ANZ announced that its housing portfolio reduced 0.7% over the quarter ending 30 June 2019, with owner occupied loans down 0.2% and investor loans down 1.8%.

However, the report stated the bank’s efforts to “deliver greater clarity and consistency in the home loan application and assessment process” following its half year results have been successful, with the increase in the quantity and quality of applications received attributed to improved communication of credit policies – both internally and to brokers.

ANZ named its ‘Home loan offer so good’ campaign as one of the actions taken to boost its residential lending over the last quarter. The offer, live for the month of August, has allowed eligible borrowers to apply for 300,000 Qantas Points and enter a draw to win up to $500,000 off their home loan.

While the measures have already been linked to improvements in July, ANZ expects it to take time to flow into home loan funds under management (FUM) growth.

“We have taken action to give our customers greater certainty by improving turnaround times and providing greater clarity to our bankers, mobile lenders and mortgage brokers about our lending policies,” said Mark Hand, group executive Australia retail and commercial,

“The next stage is to maintain that and see it translate into settlements over the coming months.”

The Q3 update also showed an increase in mortgage delinquencies, with 90+ days past due increasing 14 bp to 114bp.

On a geographic basis, around 9bp of the movement came from NSW and VIC in aggregate.

On a product basis, a third of the movement came from interest only home loans being converted to principal and interest.