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Resi mortgage growth remains above pre-COVID-19 levels

Although growth has weakened, residential mortgage growth continues to perform above pre-pandemic levels, APRA has revealed.

Residential mortgage growth, albeit moderated, has remained above pre-COVID-19 levels despite an environment of higher interest rates and lending margin pressure on Australia’s banks, the latest Australian Prudential Regulation Authority (APRA) stats have revealed.

The quarterly authorised deposit-taking institution (ADI) performance statistics for the quarter ended 31 March 2024 have shown an increase of 4.1 per cent on the previous corresponding period in the credit outstanding for residential mortgages, from $2.14 trillion to $2.23 trillion.

Both owner-occupier lending and investment lending recorded increases, up by 4.9 per cent ($1.42 trillion to $1.49 trillion) and 3.8 per cent ($642.7 billion to $667 billion), respectively.


This lift comes despite mortgage affordability and serviceability deteriorating, with recent research from ANZ and CoreLogic revealing the median income needed to service a new loan median dwelling value reached 48.9 per cent nationally.

Home values also hit a record high in November 2023 along with a further cash rate increase during the same month, ANZ and CoreLogic’s report stated.

The rise in investor lending was reflected in the Australian Bureau of Statistics’ (ABS) most recent Lending Indicators data, which revealed a year-on-year increase of 36.1 per cent (April 2023 to April 2024) equating to $10.9 billion from $7.9 billion.

Meanwhile, the value of loan commitments to owner-occupiers grew by 18.7 per cent during this same period, up from $15.5 billion to $18.5 billion.

Mish Tan, ABS head of prices statistics, said the lift in investor lending likely reflected “expectations of higher rental yields and the greater borrowing capacity of investors.”

Although investor lending has recorded strong yearly growth, APRA’s statistics have revealed a slight drop in the share of total credit outstanding in residential mortgage investments, down slightly by 0.2 percentage points from 30.5 per cent (March quarter 2023) to 30.3 per cent.

Meanwhile, the share of owner-occupier loans increased 0.3 percentage points from 67.5 per cent to 67.8 per cent in March 2024.

Additionally, loans 30–89 days past due increased from 0.5 per cent to 0.7 per cent during this period, while non-performing loans reached 1 per cent as of the March quarter of 2024 (up from 0.7 per cent the year prior).

APRA’s data further revealed that the amount of new residential mortgages funded fell 1.2 per cent from $132.8 billion to $131.1 billion, with the share of owner-occupier loans during this quarter dropping by 3.2 percentage points to 64.6 per cent.

The six times debt-to-income ratio also decreased in this quarter, down by 2.3 percentage points to 5.2 per cent.

However, the share of new mortgages funded for investments increased by 2.9 percentage points to 33.2 per cent.

According to APRA, the country’s ADI’ are “well-positioned to navigate through potential economic challenges on the horizon” as capital ratios reached a new high (up to 20.5 per cent from 19.6 per cent) despite narrowing margins and slowing profit growth (down 4.3 per cent to $39.4 billion from $41.2 billion).

[RELATED: New mortgage values up almost 25% YOY]

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