Wholesale lenders continue downwards slide

Borrower desertion from the wholesale lending sector continues to gather pace, with June lending volumes ten per cent less than May, and only 40 per cent of the June 2007 volume, according to data on loans to owner-occupiers published by the Australian Bureau of Statistics yesterday.

The reducing loan volume - of 3147 to owner occupiers in June - is not the only concern, but the dollar value of all loans for the month totalled $543 million, less than half of the $1.1 billion advanced in December 2007 and a quarter of the $2 billion in June 2007.

The average loan size continues to shrink. In June the average loan was $173,000, in May $178,000; six months earlier the average was $203,000 and a year ago $255,000. The data is complicated by the fact that the ABS breaks out data at a lender level only for loans to owner-occupiers, and wholesale lenders tended, in the past, to cater to investors and business owners.

The trend is not specific to wholesale lenders, with non-banks (which includes wholesale lenders, credit unions and building societies) experiencing a halving in loan volumes in the year to June, to 6711, with the average loan falling to $181,000 from $233,000.

Building societies saw lending volumes fall 45 per cent of the volume compared to June 2007, though the average loan size remained stable at $212,000.

For banks, loan volumes in June fell three per cent compared to May, and fell by 14 per cent from June 2007, but the average loan size continues to trend up.

The average loan size for banks, of $253,000 is seven per cent higher than twelve months ago, four per cent higher than six months ago and one per cent higher than May.

The total value of dwelling commitments in June, including refinancing, was $18billion or 3.4 per cent lower than May on a trend basis, with owner-occupied accounting for $12.5 billion (a 3.6 per cent decline) and investment housing $5.5 billion (a three per cent decline).

When seasonally adjusted, total dwelling commitments are $18.047 billion, a 0.9 per cent decline on May.