Investors take up the slack in the mortgage market

John Kavanagh

New owner occupier housing finance commitments fell 4.1 per cent in October, the fifth consecutive month that new lending to home buyers has fallen.

Lending to residential property investors grew 1.1 per cent in October, continuing an unbroken growth trend over the past 12 months.

According to the latest Australian Bureau of Statistics lending data, new lending to investors has increased by 89.6 per cent over the 12 months to October, while new lending to owner occupiers has grown 15.1 per cent. 

Overall, total new housing finance commitments are up 32.2 per cent over 12 months.

External refinancing fell 0.4 per cent in October, a reflection of the fact that interest rates, particularly fixed rates, have started to rise.

Reserve Bank lending data published earlier in the week show lenders mortgage balances increased by 0.6 per cent in October and by 6.7 per cent over the past 12 months.

The annual growth rate is the highest recorded since 2017.

APRA data on the market show that Commonwealth Bank and NAB are growing their mortgage books above system, while ANZ and Westpac continue to fall behind.

CBA’s mortgage book grew 2.3 per cent over the three months to October, compared with system growth of 1.7 per cent over the same period. NAB’s book grew 1.8 per cent.

Westpac’s book grew 1 per cent over the three months, while ANZ’s declined by 0.5 per cent. Its home loan portfolio is shrinking at an annualised rate of 2 per cent.

Other lenders growing ahead of system include MyState Bank, which grew 9.4 per cent over the three months, AMP Bank (2.7 per cent), Arab Bank (5.5 per cent), Auswide (3.1 per cent), Bank of China (8.1 per cent), Bank of Queensland (2.9 per cent), Citibank (3.1 per cent), HSBC Bank Australia (4 per cent), Macquarie Bank (7.6 per cent).

A number of smaller lenders have been uncompetitive in recent months. Orange Credit Union, Rabobank, Australian Mutual Bank, Greater Bank, Police Credit Union, QT Mutual, Qudos and Victorian Teaches have all suffered declines in their books in the past three months.