Westpac housing loans up 5% YOY

Westpac Group (Westpac) has released its financial results for the six months ended March 2024 (1H24), which revealed that its mortgage book has increased by $51 billion during the half to $495.2 billion, up 5 per cent on 1H23.

Owner-occupier loans comprised 67.8 per cent of its total mortgage portfolio, up from 67.1 per cent in the previous half (2H23), and investment property loans made up 32.1 per cent of its mortgage book during this period.

Meanwhile, first home buyers made up 13.7 per cent of the group’s total mortgage portfolio.

Furthermore, the average loan size also grew during 1H24, with the average loan now sitting around $495,000, up from $445,000 in 1H23.

Westpac Group’s chief financial officer Michael Rowland said that portfolio competition has shifted as 99 per cent of new mortgages flowed into variable rates during the half. He confirmed its portfolio is now 85 per cent variable rate, up from 60 per cent during a “COVID-19 low”.

Rowland further said that while the group has passed the peak of fixed-rate mortgage expiries last year, there’s still $37 billion of fixed-rate loans set to expire this half.

Commenting on the group’s results, chief executive Peter King said Westpac has “managed growth and margins in a disciplined way amid a slowing economy and competitive banking sector”.

“Net profit after tax, excluding Notable Items, was down 1 per cent for the half and 8 per cent from the prior corresponding period,” King said.

“We grew our major Australian segments in a disciplined way with mortgages and deposits up 5 per cent and business lending up 9 per cent over the year. The impact of competition on mortgage margins moderated this half.”

Cashbacks to be scrapped amid slowing refi activity

Westpac also announced that cashback offers for borrowers at its RAMS, BankSA, and St.George brands will be removed by 30 June 2024.

Speaking to Mortgage Business, a Westpac spokesperson said that the ”decision was made with the refinance market slowing and in line with Westpac’s mortgage strategy to secure the right returns and balanced approach.”

Indeed, the latest Lending Indicators data released by the Australian Bureau of Statistics (ABS) revealed that the value of external financing decreased in March 2024 (seasonally adjusted) by 2.5 per cent to $16 billion, 24.9 per cent lower than the same period last year.

External refinancing values for owner-occupier housing fell 3.1 per cent to $10.3 billion (an annual drop of 27.8 per cent) and investor housing fell 1.4 per cent to $5.7 billion, 19 per cent lower than a year ago.

[RELATED: Home loan values record strong yearly growth: ABS]