Investor lending dips, as loans get switched over to cheaper owner-occupier: APRA/RBA updates

Investor lending at Australian banks has dipped, according to the latest figures from the Australian Prudential Regulation Authority(APRA).

APRA’s statistics show a $1.57trn total loan books of banks during August, a slight decrease of 0.1% from $1.58trn in July.

The drop was due to a decrease in investment lending with total investment loan books at the banks dropping by $3bn - around 0.5 percent from $553bn to $550bn.

Owner occupier lending rose slightly by $1.3bn (or 0.1%) from $1.022trn to $1.024trn in the same time period, Australian Broker noted.

The big four banks held $1.30bn in August which reflected 82.5% of the total market share.

The owner occupier loan books of the big four sat at $830bn in August (81.0% of total market share) while investment lending sat at $472bn (85.4% of total market share).

APRA’s figures for the four major banks and the largest non-major banks are as follows:

APRA does not re-adjust for re-classified loans. By contrast however Australian Broker also noted the Reserve Bank of Australia’s (RBA’s) monthly financial aggregates show that overall lending volumes continue to increase with total housing credit growing by 0.5% from July to August and by 6.6% year-on-year.

The RBA estimates that $58bn worth of loans was switched from investor to owner-occupier between July 2015 and August 2017.

Some $1.7bn was moved in August 2017, the website noted.