Smaller lenders the most aggressive property investment lenders

John Kavanagh
The strong growth in lending to residential property investors, which has caused concern at the Reserve Bank and the Australian Prudential Regulation Authority, is being driven by small lenders.

According to Reserve Bank credit data released on Friday, lenders' mortgage balances increased by 0.6 per cent in December - the same rate of growth the RBA reported in the previous four months. For the 12 months to December mortgage balances grew by 7.1 per cent.

Owner-occupier mortgage balances grew by 0.5 per cent in December and by 5.6 per cent over the 12 months to December.

Investor mortgage balances grew by 0.9 per cent in December and by 10.1 per cent over the 12 months to December.

The total value of outstanding loans to owner-occupiers is A$$935.9 billion and the total value of loans to property investors is $487.7 billion.

In December the Australian Prudential Regulation Authority wrote to all approved deposit-taking institutions, saying that prudential risks in the housing finance market appeared to be increasing and that it would increase its "level of supervisory intensity".

APRA said: "Fast or accelerating credit growth can be a key indicator of a build-up in risk. Given the currently very strong growth in investor lending, supervisors will be particularly alert to plans for rapid growth in this part of the portfolio."

APRA banking statistics show that over the 12 months to December lenders that have grown above system in overall mortgage lending include ANZ, Macquarie Bank (up 41.5 per cent), NAB, Defence Bank, bankmecu, QT Mutual Bank and Teachers Mutual Bank.

Lenders that had strong growth in their investment loan portfolios over the same period include Arab Bank, Bank of China, Defence Bank, Macquarie Bank and Teachers Mutual Bank.

The big banks' investment lending activity is in line with system.