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Owner-occupied loans march ahead of investors: APRA

Owner-occupied lending grew by over $10 billion in May, but investor lending growth slumped after recently gaining pace, according to new APRA data.

The Australian Prudential Regulation Authority’s (APRA) monthly authorised deposit-taking institution (MADIS) statistics for May 2021 have revealed that total residents’ loans and finance leases increased by 0.4 per cent – or $12 billion – in May.

This was primarily driven by strong growth in owner-occupied lending, which rose by 0.9 per cent or $10.6 billion.

However, investor lending increased by only 0.1 per cent (or $900 million), marking a decline in the growth rate from April when it rose by $2.1 billion or 0.3 per cent, and March, when it increased by $1.6 billion or 0.2 per cent.

APRA attributed the overall recent sustained growth in home lending to “robust” borrower demand underpinned by record-low interest rates, government measures supporting first home buyers (such as the First Home Loan Deposit Scheme), and new home building, as well as an optimistic employment outlook.

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Among the major banks, Westpac recorded the largest rise in the owner-occupied portfolio, which increased from $233.4 billion in April to $237 billion in May. However, its investor loan portfolio shrunk from $178.1 billion in April to $177.2 billion in May (while Westpac’s loan book totalled $414.1 billion in May, up from $411.4 billion in April).

Westpac’s total residents’ loans and finance leases stood at $592.7 billion.

The Commonwealth Bank of Australia (CBA) also recorded growth in its owner-occupied portfolio, which rose from $315.1 billion in April to $317.4 billion in May, while its investor lending portfolio grew from $160.8 billion in April to $161.7 billion in May.

CBA’s loan book totalled $479.1 billion in May, up from $476 billion in April, while its residents’ loans and finance leases totalled $675.1 billion.

ANZ’s total residents’ loans and finance leases sat at $408.1 billion, while its loan book remained stable, declining slightly from $262.9 billion in April to around $262.8 billion in May.

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This decline was driven by ANZ’s investment portfolio, with lending in this segment decreasing from $87.4 billion in April to $87.3 billion in May. The major bank’s owner-occupied loan book remained steady at $175.5 billion in May.

The National Australia Bank (NAB) recorded a rise in its loan book from $263.4 billion in April to $265.3 billion in May, driven by an increase in owner-occupied lending, which increased from $163.2 billion in April to $165.3 billion in May.

NAB’s investor lending levels declined slightly from $100.2 billion in April to $100 billion in May, APRA statistics revealed.

The major bank recorded $480.6 billion in total residents’ loans and finance leases.

In addition, APRA reported that non-financial business lending recorded a slight increase of 0.2 per cent – or $1.7 billion in May, reversing the decline of 0.1 per cent ($1.2 billion) in April.

NAB recorded the largest volume of loans to non-financial businesses in May with a total of $174.6 billion, followed by the CBA ($141.4 billion), Westpac ($125.2 billion) and ANZ ($113.4 billion).

According to APRA, the outlook for non-financial business lending would continue to be supported by a positive economic growth trajectory, strong surveyed business confidence, and government policy measures.

Other household lending (such as fixed-term personal loans) declined by $100 million or 0.2 per cent in May.

However, this represents a slight recovery from April, when lending in this segment fell by $400 million or 0.6 per cent, a new low in APRA’s records.

Meanwhile, the Reserve Bank of Australia’s financial aggregates data for May 2021 revealed that housing credit totalled 0.6 per cent in May, rising marginally from 0.5 per cent in April.

Housing credit came to 4.8 per cent in May 2021, compared with 3.2 per cent in May 2020, the figures showed.

Business credit recovered in May 2021 (0.2 per cent), compared with a 0.3 per cent decline in April 2021.

However, business credit slumped by 2.0 per cent for the year ended May 2021, compared with a 5.7 per cent gain in May 2020.

Personal lending declined by 6.3 per cent in May 2021, but this represented a recovery from a 10.3 per cent decline in May 2020. This segment posted a 0.2 per cent gain in May 2021, compared with no movement in April 2021.

Total credit grew by 0.4 per cent in May 2021 compared with 0.3 per cent in April 2021, and 1.9 per cent in May 2021 compared with 3.2 per cent in May 2020, RBA data showed.

[Related: CBA, Westpac loan flows nudge ahead of peers]

Owner-occupied loans march ahead of investors: APRA
Owner-occupied loans march ahead of investors: APRA
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Malavika Santhebennur

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.

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