Residential lending jumps by more than 7%

Of that total, owner-occupied loans made 65.3 per cent ($1.0 trillion) as at 30 June 2017 and investor loans 34.7 per cent ($535.7 billion), marking respective increases of 8.1 per cent and 5.8 per cent on the 30 June 2016 results. These numbers are according to APRA’s Quarterly Authorised Deposit-taking Institution (ADI) Property Exposures report for June 2017 released this week.

The report also revealed that new interest-only (IO) lending for ADIs with greater than $1 billion of residential term loans has fallen by 2.5 per cent year-on-year to a 35.3 per cent portion ($135.5 billion). However, all IO loans held by that same ADI group made a proportion of 38.2 per cent ($581.0 billion) as at 30 June 2017.

Big banks have ‘work to do’

RateCity money editor Sally Tindall said that the fall in new IO lending showed that banks were responding to regulatory speed bumps designed to limit IO lending.

“[The] data is clear: the banks have heard APRA’s message and have hit the brakes for new lenders looking to pay interest-only.”

The prudential regulator in May directed lenders to keep new IO lending to below a 30 per cent cap and investment lending growth to within 10 per cent.

Breaking the numbers down further, the major banks reported a total of $502.2 billion in IO loans, making up 40.4 per cent of their total books. That’s compared with $23.9 billion in new IO lending, or 31.5 per cent, down from a 46.8 per cent portion in the quarter to June 2016.

“The big four banks still have some work to do: collectively they’re sitting at 31.5 per cent,” Ms Tindall said.

In comparison, new IO lending at other banks made 26.9 per cent of total residential loan books and all ADIs reported a new IO lending portion of 30.5 per cent ($30.1 billion), down from 36.7 per cent ($36.1 billion) in the quarter to June 2016.

Broker share

APRA reported that third-party originated lending made 50.5 per cent of new lending, up from 48.1 per cent in the quarter to June 2016.

The portion was slightly higher (50.8 per cent) in the bank sector, up from 48.4 per cent. Credit unions and building societies reported a broker share of 32.3 per cent, down slightly from 35.0 per cent.

The major banks reported a broker share of 48.7 per cent, up from 46.8 per cent, and other domestic banks reported brokers had 55.4 per cent, up from 51.2 per cent.

APRA reported that at foreign banks, a whopping 70 per cent of loans approved came via the third-party channel, up from 66.3 per cent in the quarter to June 2016.

[Related: Interest-only loans proving less popular]