Mortgage credit growth up despite higher interest rate environment

The latest Quarterly Authorised Deposit-taking Institution (ADI) Performance report, released by the Australian Prudential Regulation Authority (APRA), has shown an increase in credit outstanding for residential mortgages of 4.7 per cent year-on-year in the September quarter 2024.

This equated to an increase from $2.185 trillion to $2.288 trillion from September 2023 to 2024. Owner-occupier credit accounted for $1.532 trillion (up from $1.457 trillion or 5.2 per cent) while investment credit grew from $655.9 billion to $686.4 billion (up 4.7 per cent).

According to APRA, the increase in mortgage credit growth for both owner-occupiers and investors was notwithstanding, a higher interest rate environment.

Additionally, APRA found that the quality of new lending “remained sound”, with the share of loans with high loan-to-value ratios (LVR) and high debt-to-income ratios being “low and stable”.

The share of loans with an LVR below 80 per cent dropped from 18.1 per cent during the September quarter 2023 to 17.4 per cent in September 2024 for credit outstanding on current residential mortgages.

This, however, increased to 31.1 per cent from 28.7 per cent (up 2.3 per cent) for new residential mortgages funded during the September quarter. Meanwhile the debt-to-income ratio fell slightly from 5.7 per cent to 5.6 per cent.

APRA further revealed loans 30–89 days past due increased slightly year-on-year from 0.5 per cent to 0.6 per cent, while non-performing loans rose from 0.8 per cent to 1.1 per cent.

Additionally, the value of new residential loans funded between the September quarters rose from $150.9 billion to $165 billion (up 9.3 per cent).

The share of these loans held by owner-occupiers decreased year-on-year, down from 66.1 per cent to 62.8 per cent; however, new investment loans rose from 31.9 per cent to 35.1 per cent, further reflecting the strong trend in investor lending seen during the second half of 2024.

Furthermore, the commercial real estate space also saw growth between the September quarters, with total commercial property limits increasing by 5.2 per cent from $443.1 billion to $466.1 billion, while total commercial property actual exposures rose by the same percentage amount, from $411.6 billion to $433.2 billion.

According to APRA, the lift in commercial real estate lending was driven by industrial property, along with stronger growth in the retail property sector, while asset quality “remained sound”.

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Adrian Suljanovic is a journalist at Broker Daily with more than two years experience reporting on all facets of the third party distribution channel.

Adrian has written for a range of business and finance titles including IFA, Investor Daily and Lawyer’s Weekly before joining the mortgages team in 2022.

He graduated from the University of Wollongong in 2021 gaining a Bachelor of Communication & Media with a major in Digital & Social Media.

E-mail Adrian at: This email address is being protected from spambots. You need JavaScript enabled to view it.