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Resident loans continue lending growth but slower: APRA

Resident loans continue lending growth but slower: APRA
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Amid continued tight economic times, loans for owner-occupied housing increased $7.6 billion (0.6 per cent) in October, monthly APRA ADI data has revealed.

Housing loan growth is ‘converging’ to “more a stable level” in the face of rising interest rates, the Australian Prudential Regulation Authority (APRA) has suggested, following the release of the regulator’s October authorised deposit-taking institution (ADI) statistics on Wednesday (30 November).

According to the latest data, loans for owner-occupied housing increased by $7.6 billion (or 0.6 per cent) in October, and by $96.6 billion (or 7.6 per cent) over the year.

The year-on-year growth rate for owner-occupied (residential) housing has continued to slow from its peak of 11.7 per cent in February 2022, APRA confirmed.

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The Commonwealth Bank of Australia (CBA), continued to lead as being the bank with the largest owner-occupier loan book (totalling just over $352 billion in October), followed by Westpac ($284 billion), then National Australia Bank (NAB) at just over $195 billion and ANZ at $177 billion.

All four majors increased their owner-occupier books over October.

Additionally, loans for investment housing increased by $1.3 billion (or 0.2 per cent) across all banks in October and by $35.2 billion (or by 5.5 per cent) over the year, APRA outlined.

Overall, total residents’ loans and finance leases increased by $13.6 billion (or 0.4 per cent) in October, while for the year ended October 2022, total residents’ loans and finance leases increased by $289.1 billion (or 9.7 per cent), the data showed.

APRA concluded that credit growth continues to remain robust despite monetary policy tightening.

Additionally, lending to financial institutions increased by $0.3 billion (or 0.2 per cent) in October and by $31.3 billion (or 25.2 per cent) for the year.

Lending to non-financial businesses increased by $5.0 billion (or 0.5 per cent) in October and by $118.4 billion (or 14.2 per cent) for the year, APRA found.

Interestingly, at a time household spending is key to family budgeting in a rising-rate environment, credit card lending had increased by $0.1 billion (or 0.5 per cent) in October, whilst other household lending (e.g. fixed-term personal loans) decreased by $0.2 billion (or 0.3 per cent).

Rate rises and a slowed loan growth rate

The latest APRA data precedes the Reserve Bank of Australia (RBA)’s 1 November board meeting, which saw the central bank announce an official cash rate of 2.85 per cent.

The November announcement followed on from a 25-bp increase in October, which had itself been an anomaly following the 50-bp rises announced in June, July, August, and September.

It means that the cash rate has increased by 275 bps since the rate-rising cycle began in May 2022. 

The move to increase the cash rate comes as the RBA attempts to curb rising inflation.

[Related: Resident loans aiding lending growth amid tight times: APRA]

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