Resident loans continue lending growth but slower: APRA

Housing loan growth is ‘converging’ to “more a stable level” in the face of rising interest rates, the Australian Prudential Regulation Authority (APRA) has suggested, following the release of the regulator’s October authorised deposit-taking institution (ADI) statistics on Wednesday (30 November).

According to the latest data, loans for owner-occupied housing increased by $7.6 billion (or 0.6 per cent) in October, and by $96.6 billion (or 7.6 per cent) over the year.

The year-on-year growth rate for owner-occupied (residential) housing has continued to slow from its peak of 11.7 per cent in February 2022, APRA confirmed.

The Commonwealth Bank of Australia (CBA), continued to lead as being the bank with the largest owner-occupier loan book (totalling just over $352 billion in October), followed by Westpac ($284 billion), then National Australia Bank (NAB) at just over $195 billion and ANZ at $177 billion.

All four majors increased their owner-occupier books over October.

Additionally, loans for investment housing increased by $1.3 billion (or 0.2 per cent) across all banks in October and by $35.2 billion (or by 5.5 per cent) over the year, APRA outlined.

Overall, total residents’ loans and finance leases increased by $13.6 billion (or 0.4 per cent) in October, while for the year ended October 2022, total residents’ loans and finance leases increased by $289.1 billion (or 9.7 per cent), the data showed.

APRA concluded that credit growth continues to remain robust despite monetary policy tightening.

Additionally, lending to financial institutions increased by $0.3 billion (or 0.2 per cent) in October and by $31.3 billion (or 25.2 per cent) for the year.

Lending to non-financial businesses increased by $5.0 billion (or 0.5 per cent) in October and by $118.4 billion (or 14.2 per cent) for the year, APRA found.

Interestingly, at a time household spending is key to family budgeting in a rising-rate environment, credit card lending had increased by $0.1 billion (or 0.5 per cent) in October, whilst other household lending (e.g. fixed-term personal loans) decreased by $0.2 billion (or 0.3 per cent).

Rate rises and a slowed loan growth rate

The latest APRA data precedes the Reserve Bank of Australia (RBA)’s 1 November board meeting, which saw the central bank announce an official cash rate of 2.85 per cent.

The November announcement followed on from a 25-bp increase in October, which had itself been an anomaly following the 50-bp rises announced in June, July, August, and September.

It means that the cash rate has increased by 275 bps since the rate-rising cycle began in May 2022. 

The move to increase the cash rate comes as the RBA attempts to curb rising inflation.

[Related: Resident loans aiding lending growth amid tight times: APRA]