APRA reports rise in share of high-LVR mortgages

The Australian Prudential Regulation Authority (APRA) has released its latest quarterly property exposures data, reporting a 7.2 per cent decline in the number of new housing loans approved with a loan-to-value ratio (LVR) of over 80 per cent in the 12 months to 30 June 2019, from $76.8 billion to $71.2 billion.

However, despite a reported easing in the risk appetites of lenders over the past few years, the share of new loans approved with a high-LVR increased, rising from 20.3 per cent to 21.5 per cent.

Of the high-LVR loans approved over the year to 30 June 2019, 68.1 per cent (14.6 per cent of total share of new mortgages) were for loans with an LVR between 80-90 per cent, while 31.8 per cent (6.5 per cent of total share of new mortgages) were for loans with an LVR over 90 per cent.

In total, APRA reported a 12.6 per cent ($47.5 billion) decline in the number of new housing loans approved in the 12 months ending 30 June 2019, down from $377.9 billion in the previous corresponding period to $330.4 billion.

The decline was driven by an 11.1 per cent ($28.9 billion) fall in new owner-occupied loans ($231.5 billion) and a 15.8 per cent ($18.6 billion) fall in new investment loans ($98.9 billion).

The number of new interest-only loans approved over the same period also declined, falling 15.4 per cent to $51.8 billion.  

As at 30 June 2019, the cumulative mortgage portfolio of the ADI sector totalled $1.62 trillion.  

The release of APRA’s property exposures data coincided with the release of its quarterly ADI performance statistics.

The decline in new home loans approved coincided with a fall in the ADI sector’s collective net profit after tax, which slipped by 5.8 per cent from $36.4 billion as at 30 June 2018 to $34.3 billion.

However, recent reports suggest that lending conditions are beginning to improve, with the latest data from the Australian Bureau of Statistics reporting 5.1 per cent growth (seasonally adjusted terms) in the value of new housing finance commitments in July – the largest monthly increase since March 2015.

[Related: New lending growth reaches five-year high]