Residential lending breaks $1.5trn

Quarterly statistics released by APRA have shed light on lending trends in Australian ADIs for residential mortgages

Residential lending breaks $1.5trn



Residential mortgages from Australian authorised deposit-taking institutions (ADIs) have continued trending upwards with decreases found in high LVR and interest-only lending.

The quarterly report on ADI property exposures released by the Australian Prudential Regulation Authority (APRA) showed that the total number of loans has reached $1.51trn as of 31 March 2017, an increase of $107.8bn (or 7.7%) from a year before.

Owner occupier loans consisted of $985.8bn (or 65.1%) of the total residential mortgage amount with investment loans making up the remaining $528.7bn (or 34.9%). The volume of owner occupier loans increased by $78.9bn (or 8.7%) in the 12 months after 31 March 2016 while investment loan volumes rose by $28.8bn (or 5.8%).

The 31 ADIs with more than $1bn of term loans held 98.7% of all mortgages at the end of March this year, equalling a total of 5.8 million mortgages worth $1.49trn.

APRA reported that the average loan size was approximately $259,000. An increase from the $250,000 recorded a year prior.

Of the total number of residential home loans, $583.3bn (or 39%) was interest-only.

Overall, $387.7bn worth of home loans was approved by ADIs with greater than $1bn in term loans in the year ending 31 March 2017. This was an increase of $13.8bn (or 3.7%) from the same time period the year before. Of the total new loans approved to end of March this year, $186.5bn (or 48%) was originated via the third party channel.

Looking at 2017’s loan approvals by category, APRA revealed the following breakdown (with increases based on data from the same time period in 2016):
  Value of total approved loans Percentage of total approved loans Value increase Percentage increase
Owner occupied $249.7bn 65.1% $7.6bn 3.1%
Investment $134.0bn 34.9% $6.2bn 4.8%
LVR greater than 80% and less than or equal to 90% $54.0bn 14.1% $2.7bn 5.4%
LVR greater than 90% $30.8bn 8.0% -$4.2bn -12.0%
Interest-only $141.6bn 36.9% -$5.3bn -3.6%

In total, the major banks held $1.22trn of residential home loans, equating to 80.8% of the total Australian mortgage book. The big four approved $295.7bn worth of new residential loans in the 12 months prior to end of March this year, or 76.3% of all new home loans.

Of the new mortgages originating with the major banks, $140.0m (or 47%) came through the third party channel.

The other domestic banks with greater than $1bn in term loans held $193.2bn worth of residential mortgages. A total of $63.7bn worth of new loans was approved in the 12 months prior to 31 March with $32.5bn (or 51.0%) coming through the third party.

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