Interest only loans in decline: APRA quarterly stats

Interest only loans in decline: APRA quarterly stats
Interest only loans in decline: APRA quarterly stats

Interest-only lending from Australian authorised deposit-taking institutions (ADIs) fell sharply in the June quarter.

“In flow terms, interest-only lending slowed to 30% of total new loans in the June quarter, down from 36% in Q1,” Tom Kennedy, economist at JP Morgan noted. 

“As a result, the stock of interest-only lending contracted for the first time since 2009, with aggregate interest-only lending values slumping by $2.3 billion.” 

Interest only loans in decline: APRA quarterly statsSource: JP Morgan

Along with a slowdown in new interest-only lending and the outright decline in the total value of interest-only loans, Kennedy said that there was also evidence banks are becoming more selective in their loan criteria, particularly in regard to high loan-to-valuation (LVR) lending. 

“The share of loans with an LVR higher than 90% has fallen further to 6.9% of total loans, while the share of lending to borrowers with deposits of more than 20% continues to increase,” he says.

The number of housing loans by banks whose exposure to the residential market is more than $1 billion was up 3.2 percent in the June quarter compared with a year ago, according to the prudential regulator’s latest statistics.

The Australian Prudential Regulation Authority’s Quarterly Authorised Deposit-taking Institution (ADI) Property Exposures for the June 2017 quarter showed the number of housing loans for ADIs with greater than $1 billion in housing loans grew to more than 5.8 million compared with 5.6 million in the June 2016 quarter.

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Interest only loans in decline: APRA quarterly stats

The new housing loans approved in the quarter edged up slightly at $98.7 billion from $98.4 billion in the year-ago quarter.

Similarly, the average balance of housing loans also rose to $262,200 from $252,100, a rise of 4 percent for the comparable period.

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Interest only loans in decline: APRA quarterly stats

 

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APRA Interest Only

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