ADIs report $14.3bn fall in mortgage volumes

The latest quarterly property exposures statistics published by the Australian Prudential Regulation Authority (APRA) have revealed that the overall value of loans approved by authorised deposit-taking institutions (ADIs) fell by 16.4 per cent ($14.3 billion) in the three months ending 31 March 2019, from $86.7 billion in the March quarter of 2018 to $72.4 billion.

The overall slide in home loan volumes was driven by a 15.2 per cent ($9.2 billion) drop in the value of new owner-occupied home loans, from $60.2 billion in the March quarter of 2018 to $51.1 billion.

The value of new investment home loans also fell, down 8.7 per cent ($5.1 billion), from $26.4 billion to $21.3 billion over the same period.  

The APRA data also reflects the continued tightening of the risk appetite of ADIs, with the value of new interest-only loans falling by 21.3 per cent ($2.9 billion), from $13.6 billion to $10.7 billion.

Further, the value of new loans approved outside serviceability declined by 26.1 per cent ($1.1 billion), from $4.2 billion to $3.1 billion as at 31 March 2019.

The value of new low-doc loans fell sharply, dropping by 60.8 per cent ($137 million), from $225 million to $88 million.

The total value of Australia’s residential mortgage book (excluding non-banks) increased by 4.4 per cent ($7 billion), from $1.59 trillion to $1.66 trillion.

Bank profits slide

APRA has also released its quarterly ADFI institution performance statistics, which revealed that the collective net profit after tax of Australia’s banks fell by 12.6 per cent ($1 billion), from $8.31 billion in the March quarter of 2018 to $7.26 billion in the March quarter of 2019.

When assessed on an annual basis, the collective net profit after tax of Australia’s ADIs dropped by 4.1 per cent ($1.6 billion), from $36.1 billion in the 12 months ending 31 March 2018 to $34.5 billion in the 12 months ending 31 March 2019.

The annual profit fall was sparked by a 2.9 per cent ($3.2 billion) decline in total operating income, from $109.2 billion to $106 billion.

Total operating expenses also increased, up 2.8 per cent ($1.5 billion), from $52.5 billion to $54 billion.

[Related: RBA lauds ‘effective’ tightening of lending standards]