The latest APRA quarterly authorised deposit-taking institution (ADI) property exposures data has shown that a rise in owner-occupier loans has driven an increase in residential mortgage lending.
New residential lending during the March quarter totalled at $127.2 billion, slipping by 0.8 per cent from the prior quarter, but it had surged by 34.4 per cent from March the year before.
APRA reported that lending to owner-occupiers had grown more rapidly than lending to investors over the year, with growth of 37.7 per cent and 29.7 per cent, respectively.
“This result is consistent with favorable borrowing conditions, including a historically low interest rate environment and government measures supporting first home buyers and new home building,” APRA reflected.
There was $88.9 billion in new owner-occupied loans during the March quarter. The segment only slightly increased market share during the three months, up by 0.1 per cent, to 69.9 per cent – but the segment had climbed 1.5 per cent higher than the 2020 March quarter.
Investor loans remained unchanged from the quarter before, occupying 28.6 per cent of the market, with its quarterly total of $36.3 billion in new loans. However, it occupied a slice than the year before, when investor loans took up 29.7 per cent market share.
Third-party-originated loans had also grown over the 12 months, with $68.8 billion in new loans over the quarter now spread over 54 per cent of the market, compared with 51.1 per cent in March 2020.
The share of new higher-risk loans, such as lending at high loan-to-valuation ratios (LVRs), declined over the quarter, but the share of new lending at high debt-to-income ratios increased.
For loans with LVRs greater than or equal to 80 per cent, the share of new lending fell to 41.1 per cent, from 42 per cent in the previous quarter.
New lending at lower LVRs remained high, with more than half (58.8 per cent) of all new loans funded at LVRs less than 80 per cent in the March quarter.
“The share of new lending at higher LVRs also remains below levels seen over the past decade,” APRA stated.
ADIs saw their net profit after tax steadily climb during the quarter, up 3.8 per cent for the year to their collective $29.4 billion. The sector’s profit had spurted from the prior quarter by 34 per cent.
Credit outstanding for residential mortgages totalled at $1.9 trillion at March, 1.2 per cent up on the prior quarter and 3.6 per cent higher than the year before.
Owner-occupied loans covered 64.6 per cent of the outstanding credit ($1.2 trillion in total), increasing their share over the year to March by 1.9 per cent, while investor loans shrunk by 1.6 per cent, to 32.9 per cent ($625.1 billion).
Interest-only loans shrunk by 3.5 per cent year-on-year, to a 13.9 per cent market share ($246.1 billion) in March, while loans with an LVR equal to or higher than 90 per cent stagnated, occupying 4.7 per cent of the market ($89.3 billion).
“The overall LVR profile of ADIs’ housing lending remains strong, with most outstanding residential mortgages well covered by collateral,” APRA stated.
[Related: Loan commitments continue record streak]
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Sarah Simpkins is the news editor across Mortgage Business and The Adviser.
Previously, she reported on banking, financial services and wealth for InvestorDaily and ifa.