Significant year-on-year decrease in home lending

by Madison Utley25 Mar 2019

A report has shown that new housing loans approved in the final quarter of 2018 were down a significant 11.9% from the year before.

The Australian Prudential Regulation Authority (APRA) has released its Quarterly Authorised Deposit-taking Institution (ADI) Property Exposures report for the December 2018 quarter.

The report looks at the value of loans the banks currently hold, as well as new loan approvals over the quarter with an emphasis on ADIs with more than $1bn of residential term loans.

The data showed that the ADIs approved $359.3bn of new loans in 2018 – a 6.5% decrease of $25.1bn year-on-year.

Of the new approvals, 69.6% were for owner-occupied loans, a 2.9% decrease from the previous year. The remaining 30.4%, investment loan approvals, were down 14.0% from 2017.

There was an 8.4% decrease in loans with a loan-to-valuation ratio (LVR) between 80 and 90%, and a 13.7% decrease in loans with an LVR greater than 90%.

Interest-only loans decreased by 38.8% year-on-year.

However, the value of loans across both commercial property and domestic housing loans has risen.

The ADIs' residential term loans to households were $1.65trn, a 4.8% increase from the preceding December. They reported 5.9 million loans, with the average amount sitting at approximately $276,000, $9,000 greater than the year before.

However, commercial property exposures for all ADIs reached $281.9bn, a 4.2% increase valued at $11.4bn when compared to December 2017.