APRA’s buffer rise to dampen loans: Morgan Stanley

A research note from Morgan Stanley Research has tracked housing loan growth, noting a continued 7-8 per cent rise across the Australian landscape in the month of November, in line with similar growth since May.

It has followed recent data from APRA showing banks wrote $11.2 billion in owner-occupier home loans in November, as well as $2 billion in new investor loans – leading them to reach a total of $1.91 trillion in housing loans on their books.

While CBA (up 10.8 per cent), NAB (10.4 per cent) and Bank of Queensland (9.3 per cent) grew above system (8 per cent) in November, Bendigo and Adelaide Bank (6.7 per cent), Westpac (2.3 per cent) and ANZ (1.4 per cent) were below.

For the year to November, ANZ was the only bank that shrunk, with a decline of 0.3 per cent in home loans. CBA on the other hand saw an 8.4 per cent rise, NAB climbed by 6.3 per cent and Westpac was up by 5 per cent.

Notably, regional banks Bendigo and Adelaide Bank and Bank of Queensland had considerably faster growth rates over the one-year period, with rises of 12 per cent and 8.2 per cent respectively.

The research note from equity analysts Richard Wiles and Andrei Stadnik, as well as research associates Sally Zhou and Charlie Hall has tipped loan growth will weaken in the second half of the year, following APRA’s rise to the minimum interest rate buffer for serviceability assessments.

“At this point the measures appear to have [been] having little impact, although the RBA [Reserve Bank of Australia] noted it ‘could take several months to be realised’,” the note stated.

But the analysts believe that housing loan growth will not follow a previous forecast from the RBA, which tipped it could accelerate to 10 per cent run rate in early 2022.

“Our forecasts assume that the major banks’ housing loan growth slows to an average of ~4.5 per cent in FY22 (or ~5 per cent excluding ANZ) due to a combination of macro-prudential measures, higher rates on fixed-rate loans, the potential for earlier RBA rate rises and more modest house price expectations,” the research note said.

CBA is forecast to see 6 per cent growth in housing loans during the 2022 financial year, following 6.3 per cent in FY21. NAB and Westpac are expected to both experience 5.6 per cent growth following increases of 3.5 per cent and 3.3 per cent respectively, the year before.

ANZ is only estimated to see 2.5 per cent growth following a 1 per cent increase in FY21.

Meanwhile Bendigo and Adelaide Bank is tipped to see higher growth of 8.1 per cent for FY22, following a 14.7 per cent in FY21. A 5.7 per cent rise was projected for Bank of Queensland in the year ahead, following a 6.1 per cent growth rate in FY21.

Meanwhile, business lending has seen a boom. Annualised system growth in loans to non-financial corporations was around 20 per cent in November, taking the growth rate to approximately 12 per cent over the past three and six-month periods.

Morgan Stanley has forecast around 10 per cent annualised non-housing loan growth at CBA for the FY22, following from 7 per cent at NAB and 5 per cent at Westpac, with ANZ tipped to only see around 2.5 per cent.

But the segment seems to be growing at a stronger rate than the forecasts, the researchers noted.

[Related: Record-breaking mortgage streak continues]

Sarah Simpkins is the news editor across Mortgage Business and The Adviser.

Previously, she reported on banking, financial services and wealth management for InvestorDaily and ifa.

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