Money Australia - August 2019

IN BRIEF

Battered

banks play

it safe

PROPERTY

L

atestdatafromtheregulatorAPRArevealsbanks

continuetoshyawayfromriskierhomeloans,as

thevalueofnewinterest-onlyandlow-docloanshit

recordlows.

Thevalueofnewloanstoowner-occupiersfell17.6%

betweenDecember 2018 andMarch 2019 to$51.1bil-

lion.Thevalueofnewloanstoinvestorsfell18.7%to

$21.3billion.

Meanwhile,thevalueofnewinterest-onlyloans

fell22.5%to$10.8billion,accountingfor14.9%ofall

newloansandthelowestpercentagesharein APRA’s

recordsdatingbackto2008.

Newlow-docloansfell48.4%to$88million,repre-

senting0.1%ofallloansandagainthelowestpercent-

agesharein APRA’srecords.

RateCityresearchdirectorSallyTindallsaysbanks

continuetobehyper-vigilantin thewakeoftheroyal

commission,despitetheeasingofregulations.

“APRAmighthaveloosenedthestringsoninter-

est-onlyandinvestorlending,butthebanksarestill

ultra-cautiouswhenit comestohighriskloans,”says

Tindall.APRAhadwantedlessthan30%ofnewloans

writtentobeinterest-only.Thebankshavewellandtru-

ly smashedthisoutofthepark.

“Notonlydointerest-onlyloansrepresentjust14.9%

ofallnewloanswritten,theyalsorepresentjust23.3%

ofthebanks’entireloanbooks,accordingtothemost

recentdata.”

F

ixed-ratehomeloanshave

accountedformorethan21.8%of

allhomeloanswrittenoverthepast

12 monthsat MortgageChoice.

Themortgagebroker’schiefexec-

utive,SusanMitchell,saysthisan

increasein demandandis hardly

surprisinggiventheconditionsin the

currentmarket.

“Lendersonourpanelhavebeen

aggressivelydiscountingfixed-rate

homeloanproducts,whichhasbeen

effectivein enticingmoreborrowers

to committo a fixedterm,”shesays.

“Withratesaslowas3.49%pa,it’s

unsurprisingto seeanincreasingpro-

portionof borrowerschoosingto fix.”

Thedataalsorevealedthatduring

May 2019 fixed-ratedemandwas

highestin Queensland,where26%

of borrowersoptedforthistype

of homeloan.It wasfollowedby

WesternAustralia(25%),while

borrowersin Victoriawerethe

leastlikelyto fix(15%).

Themostpopularhomeloansin

Maywereongoingdiscountvaria-

ble-rateproducts,followedbybasic

variablerates.

“Forthoseborrowerswhomaybe

consideringfixingpartor allof their

homeloan,nowcouldbea goodtime

to doso,”saysMitchell.“Current

fixed-rateloanpricingpresentsgood

valuebylong-termstandards.

“Thisis goodnewsforborrowers

seekingrepaymentcertainty.In

particular,forfirsthome

buyerswhoarelookingto

takeadvantageof gov-

ernmentschemesand

recordlowinterest

ratesto enterthe

propertymarket

forthefirsttime.”

Sherecom-

mendsborrowers

reviewtheirhome

loanat leastoncea

yearto ensureit still

meetstheirneeds.

More borrowers fix their mortgage rate

MORE

PROPERTY

STORIES ON

P58-

HOME LOANS

COMPILED BY DARREN SNYDER

NEW LENDING as at March 2019

Type of loan Value of new loans written Share of all loans previous quarterChange from

Owner-occupier $51,094.5m 70.6% -17.6%

Investor $21,300.9m 29.4% -18.7%

Interest-only $10,785.4m 14.9%* -22.5%

Low-doc $88.4m 0.1%* -48.4%

Source: APRA, based on ADIs with loan books of more than $1bn as determined by APRA.

*Record low