Despite all the talk of an overheated housing finance market, the latest official data show that lenders’ mortgage balances continue to grow at a moderate rate.

Reserve Bank figures released yesterday show lenders’ mortgage balance increasing by 0.4 per cent in February, compared with the previous month. The month-on-month growth rate has been unchanged since December.

Over the 12 months to February lenders’ mortgage balances grew by 3.8 per cent. This is the highest annual rate of growth since the middle of 2019 but it is still below the long-term average.

Owner occupiers continue to drive growth in the mortgage market. Lenders’ owner occupier mortgage balances grew 5.9 per cent in the 12 months to February, while investor mortgage balance grew by 0.2 per cent.

One of the hot issues in the mortgage market has been the accusation made by non-banks and small ADIs that the structuring of the Reserve Bank’s term funding facility has given the big banks an unfair advantage, allowing them to use cheap central bank funding to undercut their smaller rivals on mortgage rates.The big banks have been offering very competitive fixed rates but it hasn’t moved the dial all that much in their favour.

The latest APRA data show that Commonwealth Bank picked up share last year and continued to grow above system in the March quarter. It has a 26.97 per cent share.

ANZ picked up share last year but has slipped back to around half system growth in the March quarter. Its share is 15.1 per cent.

NAB’s share fell last year and continues to decline. Its share has fallen from around 15.5 per cent a year ago to 15 per cent now.

Westpac also lost share last year, falling from around 24.2 per cent a year ago to 23.4 per cent now.

Overall, with a continuing decline in personal credit balances and weak business credit balances, total credit growth of 1.6 per cent over the past 12 months was the weakest annual rate of growth in 11 years.