Powered by MOMENTUM MEDIA
subscribe to our newsletter

Mortgage approval ‘backlog’ drives slump in volumes

“Operational” lags experienced by lenders have contributed to a sharp decline in home loan volumes across the mortgage market, new ABS data has revealed.

According to the latest Lending Indicators data from the Australian Bureau of Statistics (ABS), the value of home loan approvals slipped 4.8 per cent to $18.5 billion (seasonally adjusted terms) in April – the sharpest decline since May 2015.

The result was driven by a 5 per cent fall in owner-occupied lending to $13.7 billion, while investor lending fell 4.2 per cent to $4.8 billion.

ABS chief economist Bruce Hockman partly attributed the decline in home loan approvals to a lag in turnaround times off the back of an influx in mortgage enquiries in March.   

“COVID-19 operational impacts experienced by some lending institutions resulted in a backlog of March housing loan applications being processed in April, which moderated the April fall in loan commitments,” he said.

Advertisement
Advertisement

Chief economist at the Housing Industry Association (HIA) Tim Reardon agreed: “Home loans approved in April largely reflect loan applications initiated in previous months.

“The modest decline in finance approvals in April reflects processing delays due to COVID.”

This is reflected in Momentum Intelligence’s Broker Pulse figures, which have identified sharp increases in assessment times for both ANZ and Westpac over the past few months.

Also reflecting on the ABS data, ANZ Research noted that it expects home lending volumes “to be soft for some time”, with both lenders and households reducing their risk appetites.

The group added that subdued demand for housing credit would “flow into house prices” and a “deteriorating construction outlook”, which would be “slightly offset” by the federal government’s new HomeBuilder scheme.

PROMOTED CONTENT


However, BIS Oxford economist Maree Kilroy is expecting an improvement in home lending volumes in the medium term, primarily in response to an easing of COVID-19 restrictions.

“The easing of restrictions on live auctions and open house inspections will see new housing loans gradually recover over the subsequent months,” she said.

Ms Kilroy added that the HomeBuilder scheme would also contribute to an uptick in demand for new construction loans, but noted that the scheme’s contribution to growth would not be evident until the backend of 2020.  

[Related: HomeBuilder could ‘intensify’ slide in property prices]

Mortgage approval ‘backlog’ drives slump in volumes
mortgagebusiness

If you’re feeling overworked and overwhelmed in this fast-paced mortgage market, it’s time to make some changes, and the Business Accelerator Program can help! Early bird tickets are on sale now. Work smarter, not harder, this year.

Charbel Kadib

Charbel Kadib is the news editor on the mortgages titles at Momentum Media.

Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.

You can email Charbel on: This email address is being protected from spambots. You need JavaScript enabled to view it.

Latest News

A foreign bank has had its Australian banking licence revoked by APRA after it pulled out of the Australian market. ...

The average number of days properties spend on the realestate.com.au site fell to a record low in May, with records broken in many states a...

The big four bank has hired the former boss of AUSTRAC as the regulator has launched an investigation against NAB for potential anti-money...

How long do you think it should take to discharge a mortgage?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.