ANZ trailing the pack in mortgage volumes

The latest monthly banking statistics from the Australian Prudential Regulation Authority (APRA) have revealed that in the month ending 31 January 2019, ANZ was the only major bank to report a decline in both its owner-occupied and investment mortgage portfolio.

ANZ’s owner-occupied loan book fell by $300 million, from $179 billion to $178.7 billion, while its investment portfolio declined by $400 million, from $79.7 billion to $79.3 billion. 

In total, ANZ mortgage portfolio dropped from $258.7 billion to $258 billion, representing a month-on-month decline of 0.27 of a percentage point. 

APRA’s latest statistics follow the release of ANZ’s market update for the quarter ending 31 December 2019, in which the bank reported that its home loan portfolio contracted by $534 million (0.2 of a percentage point).

Reflecting on the results, ANZ CEO Shayne Elliott noted the impact of weakening market conditions but conceded that the bank may have been overzealous in its implementation of tighter credit criteria in response to scrutiny.   

“Consumer sentiment has remained generally subdued with uncertainty around regulation and house prices impacting confidence,” Mr Elliott said.

“While we are maintaining our focus on the owner-occupier segment, we acknowledge we may have been overly conservative in our implementation of some policy and process changes.”

NAB leads the pack

The APRA data has also revealed that of the big four banks, NAB reported the strongest home lending growth in the month to 31 January 2019 (0.15 of a percentage point), followed by Commonwealth Bank (0.14 of a percentage point) and Westpac (0.7 of a percentage point).

However, in numerical terms, Commonwealth Bank reported the largest increase to its mortgage portfolio ($600 million), followed by NAB ($400 million) and Westpac ($300 million).

Commonwealth Bank also boasts the largest mortgage book, which as of 31 January 2019 totals $427.6 billion, followed by Westpac ($413.4 billion), NAB ($261 billion) and ANZ ($258 billion).

According to APRA, as at 31 January 2019, Australia’s residential mortgage portfolio totalled $1.67 trillion, with home loans issued by the major banks making up more than 81 per cent of the total portfolio.

Total housing credit growth slows

The Reserve Bank of Australia (RBA) has also released its latest Financial Aggregates data, which reported that in the month to 31 January 2019, total housing credit volumes grew 0.2 of a percentage point in seasonally adjusted terms, a 0.1 of a percentage point decline from the 0.3 of a percentage point growth in December 2018.

Further, in the year to January 2019, housing credit grew by 4.4 per cent, slowing by 1.9 per cent when compared to growth of 6.3 per cent reported in the 12 months to 31 January 2018.

The slump was triggered by owner-occupied credit growth of 6.3 per cent over the same period, and investor credit growth of 1.0 per cent.

According to property data group CoreLogic’s research analyst, Cameron Kusher, the rate of owner-occupied growth was the slowest recorded since September 2015, with investor credit growth “historically low”.

Mr Kusher attributed the slowdown to general market softening and the transition of interest-only loans to principal and interest.

“Housing finance data shows that fewer approvals for mortgages are being granted. However, another key contributor to slowing credit growth is that many investors have switched from interest-only mortgages to principal and interest,” he said.

“Previously, these borrowers weren’t paying off the principal on their mortgage, now that they are, coupled with far less investor mortgage demand, they are paying back their principal and fewer new investor mortgage applications are occurring, which in turn contributes to the ongoing slowing of investor credit growth.”

The RBA also reported that personal lending volumes declined by 2.8 per cent, while business lending volumes increased by 5.2 per cent in the year to 31 January 2019. 

Total credit volumes increased by 4.3 per cent, a 0.6 of a percentage point decline from growth of 4.9 per cent in the previous corresponding period. 

 [Related: ANZ CEO rues ‘overly conservative’ lending policy]