The Australia and New Zealand Banking (ANZ) Group’s half yearly financial results show solid growth across the lender’s residential mortgage portfolio.
Complementing the bank’s 23% year-on-year increase in cash profit to $3.4bn was a rise in the number of home loans from 976,000 to 992,000 in the 12 months prior to the first half of the 2017 financial year – an increase of 1.6%.
This puts the total funds under management in ANZ’s home loan portfolio at $256bn, which is $13bn more than the year before.
Of these, 62% of all home loans are owner occupied while 34% are investor. This signifies a shift from the same period the year before when 60% of all lending was owner occupied and 36% was investor. Equity line of credit remained steady at 4% in both the first half of 2016 and the first half of 2017.
“In retail and commercial banking in Australia and New Zealand we are focused on being the best bank for home owners and people who want to start and run a business,” said ANZ chief executive officer Shayne Elliott.
“Both Australia and New Zealand delivered a solid performance. We are growing prudently in home lending in Australia concentrating on owner-occupiers, and through a focus on the small business segment.”
The broker channel grew over the year with 50% of all loans in 1H17 written through the third party (compared to 48% the year before).
As for the specific types of loans written at ANZ, these can be broken down as follows:
|Principal and interest
Six per cent of all mortgages at ANZ in the first half of the financial year were first home buyers while 5% were low doc loans.
ANZ has retained the same market share based on data from the Australian Prudential Regulation Authority
(APRA), writing 15.6% of all loans. This places the bank third out of the big four in terms of market share.
The number of borrowers ahead on their mortgage repayments has dropped by 1% over the year with the number now sitting at 39%.
ANZ has also implemented a range of updated loan serviceability criteria between 2015 and 2017. This includes the introduction of an interest rate floor of 7.25% applied to new and existing mortgage lending plus an income adjusted living expense floor or household expenditure measure (HEM).
The LVR cap has been reduced to 90% for investment loans and 70% for mortgages in high risk mining towns.
The interest-only term of owner occupied interest-only loans has been decreased to five years while an LVR cap of 90% has been introduced on all new interest-only owner occupied loans. External refinances for interest-only get a reduced LVR cap of 80%.
In terms of foreign borrowers, ANZ has withdrawn all lending to non-residents while limiting acceptance of foreign income when determining serviceability.
Mortgage group’s loan settlements up 19%
Annual mortgage lending increases by 7.5%
Non-bank hits $2.6bn in mortgage originations