Mutuals continue to see strong growth

According to analysis of APRA data by the Customer Owned Banking Association (COBA), the member-owned bank saw a surge in home loan growth in the September quarter 2020.

COBA has outlined that while the authorised deposit-taking institutions (ADIs) saw mortgage growth rise by 0.57 per cent in the September quarter (on value terms), the increase was much higher when looking at customer-owned banks in isolation.

According to COBA, the sector saw loan growth increase 1.32 per cent in the quarter – more than double that of the ADI sector as a whole.

Michael Lawrence, CEO of COBA, commented: “While negotiating the pandemic with operational resilience, customer-owned banking institutions have also continued to back Australians on home ownership...

“These banking institutions are helping customers take advantage of a low interest rate environment, including first-time buyers and owner-occupiers refinancing to save money,” he added.

Mr Lawrence added that the record levels of mortgage activity – spurred on by record-low interest rates and government incentives and initiatives, such as the First Home Loan Deposit Scheme – were being felt in the mutual sector.

He said: “The government’s First Home Loan Deposit Scheme is a contributor to loan activity and a standout for younger buyers entering the market. More than 8,300 first home buyers have now purchased a property with a loan from one of the 20 customer-owned banking institutions on the scheme’s panel of lenders.”

Mr Lawrence concluded: “Going the extra mile for customers is what our sector does best. This is reflected in innovations in home lending, such as Heritage Bank’s new loans origination platform that will cut the processing time for the average home loan application by up to 80 per cent.” 

While the APRA figures relate to the September 2020 quarter, several customer-owned lenders have also released initial results for the December 2020 quarter, too.

Community First Credit Union, for example, reported record lending for the December 2020 quarter.

The lender and its online subsidiary Easy Street funded over $140 million in residential loans in the final quarter of the calendar year.

Recording a net loan growth of $100 million in the first six months of the financial year, the annualised net lending growth was 25.0 per cent, the credit union added.

While the lender has a small inflow of loans from the broker channel, the majority of its flow is from the proprietary channel.

Noting the record figures, the CEO of Community First Credit Union, John Tancevski, said: “This is an incredible result for Community First as this dramatic growth was achieved during a pandemic and despite our credit assessment and loan processing teams working remotely since April 2020. We have proven to be a real alternative to the big four banks.

“In total, we lent over $140 million in the 2020 December quarter to both new and existing members, while recording a 25 per cent increase in annualised net lending growth in December 2020 compared to the same month in December 2019.”

Mr Tancevski added that “several external factors, including strong growth in house prices in some capital cities and regional centres”, contributed to Community First’s spike in mortgage growth throughout 2020. 

“In fact, we continue to fund strong volumes of loans into 2021 off the back of our success,” he concluded. 

[Related: Mutual banks continue growth after a difficult year]