New loans slide in first months of FY22

Property exchange settlement platform PEXA has released its quarterly Property and Mortgage Insights (PMI) report, which has stated that sale settlements with a new loan declined by 2.5 per cent nationally month-on-month in August 2021 following a similar trend in sale settlements.

Much of the country was in lockdown for the first two months of FY22 to curtail the spread of the Delta strain of the coronavirus. While most states have reopened, lockdowns continue in NSW, the ACT, and Victoria.

On the other hand, the consumer lending and mortgages data has shown that new loans still jumped by 39.2 per cent year-on-year in August 2021, suggesting that consumer demand has continued to remain strong.

Across the states, settlements with a new loan fell by 5.9 per cent in NSW month-on-month at August to over 14,200, but rose by 37.2 per cent year-on-year.

New loan settlements also fell in Victoria (by 5.2 per cent to 14,643) and Western Australia (by 2.0 per cent to 5,838) month-on-month to August, but rose by 37.6 per cent and 36.8 per cent respectively year-on-year.

Conversely, they rose by 2.3 per cent in Queensland to 13,967 and by 4.4 per cent in South Australia to 3,422 during this period.

Queensland recorded the largest year-on-year increase of 48.0 per cent at August 2021, while South Australia’s new loan settlements grew by 26.5 per cent.

“Tale of two halves” for big four banks

Major banks won more new loans than they lost, which was up by over 28,000 in the past 12 months.

However, the major banks have been trending downwards, while non-banks have edged upwards in recent months, according to PEXA.

PEXA has also provided a state-by-state analysis of competition within the lending sector, which has highlighted a “tale of two halves” for the major banks.

Major banks held the strongest winning position in NSW, Victoria, and South Australia for new loans over the past 12 months.

However, non-bank lenders lost significantly more loans than they won during this period in NSW (although they have made gains in recent months).

In Victoria, the major banks’ gain reportedly came at the expense of non-banks, where new loans were down by almost 12,000 during this period.

In South Australia, non-bank lenders had the weakest position of all lenders over the last 12 months but they turned this around in the past quarter, PEXA reported.

On the other hand, in Queensland, major banks reached their lowest position in June 2021, while their losing position widened in 2021.

The major banks lost more new loans than they won in the state in the past 12 months.

Customer owned banks held the strongest winning position in Western Australia over this period.

The major banks held a neutral position over the past year in the state, although they lost ground in recent months.

Commenting on the findings, PEXA Insights’ head of research Mike Gill said: “Australia’s top four banks have further solidified their leading market position for new loans in Victoria, NSW and South Australia, however they have lost ground in recent months to customer-owned and domestic banks in both Queensland and Western Australia.”

Queensland sale settlements grow, others slump

PEXA’s research also found that Queensland was the only mainland state to record quarter-on-quarter growth in property sale settlements, with more than 59,000 settlements worth $42 billion processed in the first quarter of the 2022 financial year (up 3 per cent on the previous quarter).

NSW’s property market was constrained by the extended COVID-19 restrictions, recording 58,000 sale settlements (down 4 per cent on the previous quarter but up 29 per cent year-on-year) worth more than $71 billion (up 80 per cent year-on-year.

Similarly, lockdowns impacted settlements in Victoria, which were down by 5 per cent on the previous quarter to 56,000 (worth more than $50 billion).

Quarterly sale settlements declined both in Western Australia and South Australia, which PEXA said could indicate that those property markets have peaked.

Western Australia recorded 23,000 settlements worth $13 billion (down 4 per cent on the previous quarter), while South Australia’s settlements dropped by 8 per cent on the previous quarter to 14,000 settlements worth $7 billion.

[Related: PEXA approved to operate in ACT]

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.