Loan settlements plunge in locked down states

ASX-listed digital property settlements platform Property Exchange Australia (PEXA) has released its Monthly Settlement & Mortgage Insights for September, which revealed that new loan sale settlements nosedived by 11.7 per cent to 12,929 in Victoria compared to August 2021 while refinance settlements were down by 1.2 per cent.

The decline was comparatively milder in NSW, with new loan settlements down 5.7 per cent in September to 13,428, and refinance settlements down 0.8 per cent, compared to August.

The declines have come as Melbourne recently hit the world record for the longest time spent in lockdown since the beginning of the coronavirus pandemic, while NSW recently passed 100 days in lockdown since it was first imposed this year in June to curtail the spread of the Delta outbreak.

Indeed, the impact of the lockdown was also recently reflected in data recently released by PEXA in a quarterly report, which showed that new home loans declined nationally since June (but surged year-on-year to August).

Similarly, the latest PEXA figures have shown that home loan activity continued to trend upward compared to 2020. Loan settlements were up 15.9 per cent in Victoria and 10.8 per cent in NSW compared to September 2020, while refinance settlements were 40.5 per cent higher in Victoria and 42.2 per cent higher in NSW year-on-year.

New residential loans were down 10.9 per cent month-on-month in Victoria to 10,403, but up 40.6 per cent year-on-year.

In NSW, residential new loans were down 7.6 per cent month-on-month to 11,960, but up by 14.4 per cent year-on-year.

On the other hand, commercial new loans were down 15.0 per cent month-on-month to 2,526, while it also recorded a year-on-year drop of 32.8 per cent.

This segment was up by 13.4 per cent month-on-month in NSW to 1,468, but down 12.0 per cent year-on-year.

The major banks’ monthly net position dipped slightly in Victoria but has remained ahead of the non-major banks, while the non-majors have improved their position and are only just lower than the majors’ “dominant” position.

Major banks fell to their most negative position in 12 months for refinances, recording a net decline in the state, while non-majors continued their growth trend, increasing their net positive position above the majors.

In NSW, major banks increased their net position for new mortgages, but have remained lower than non-majors. The non-major banks’ net position declined slightly in September compared to their net position in August.

For refinances, major banks declined further into a net negative position in their worst showing for the past 12 months. At the same time, non-major banks continued to gain on their net positive position in September.

Refinancing activity has been at a record high in the recent past, with PEXA data showing that refinance levels surpassed the previous record set in 2020 to reach a new high in August. Figures from the Australian Bureau of Statistics showed that refinancing reached a record high of $17.8 billion during August.

Positive month for Qld, WA

On the other hand, Queensland – which has enjoyed low COVID-19 case numbers and more freedoms – recorded a 7.4 per cent monthly rise in new loan settlements in September (and a 30.5 per cent yearly increase).

Refinance settlements were up 6.1 per cent on August 2021, and 63.5 per cent higher year-on-year.

Residential new loans were up 7.6 per cent month-on-month and 41.8 per cent year-on-year to 12,792, while commercial new loans were up 5.9 per cent compared to August to 2,205 (however it was down 10.7 per cent year-on-year).

The non-major banks have continued to trend upwards for new loans but showed a slight decline in September, while the major banks showed an improvement but remained in a net negative position.

For refinances, the major banks continued their declining trend, remaining in net negative territory and were in their worst position in the past year.

Non-major banks continued to grow in Queensland, winning more refinanced loans than they lost.

In Western Australia, new loan settlements were up 4.3 per cent in September to 6,091, and rose by 19.3 per cent since September 2020, while refinance settlements were flat month-on-month but 80.0 per cent higher on 2020.

Major banks improved their net position for new loans in the state, winning slightly more than they lost. Non-majors also improved and remained well ahead of the majors in net positive territory.

The major banks maintained their strong net positive position in refinanced loans in Western Australia, while the non-majors were also flat, remaining negative and behind the majors.

[Related: Housing market surpasses $9 trillion mark]