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All four major banks have reported growth in their owner-occupied portfolios, driven by a spike in refinancing activity amid the COVID-19 crisis.
The Australian Prudential Regulation Authority (APRA) has released its latest monthly authorised deposit-taking institutions statistics (MADIS), revealing that each of the big four banks reported growth in their owner-occupied portfolios in March.
The Commonwealth Bank of Australia (CBA) led the pack, with its owner-occupied book growing by approximately $1.8 billion, from $290.4 billion in February to $292.2 billion.
This was followed by NAB, which thickened its portfolio by approximately $1.1 billion, from $151.7 billion to $152.8 billion.
Westpac also recorded strong owner-occupied growth, with its book thickening by approximately $600 million, from $227.6 billion to $228.2 billion.
ANZ’s growth was less pronounced, with its owner-occupied portfolio increasing by approximately $100 million, from $160.5 billion to $160.6 billion.
This comes amid evidence of a sharp increase in refinancing activity, as borrowers rush to secure better deals and ease their financial burden in light of the economic fallout from the COVID-19 crisis.
This is reflected in the latest mortgage and competition index from the Australian Finance Group. According to its survey of 3,000 brokers, refinancing applications made up 33 per cent of all home loans lodged in March, up from 27 per cent in February.
The latest available data from property research group CoreLogic also reported that over 75 per cent of valuations ordered in recent weeks were for the purpose of refinancing.
Following release of the bank’s first half results for the 2020 financial year (1H20), ANZ CEO told Mortgage Business that demand for refinancing continued into April.
“What we’ve seen surprisingly in the last six weeks is a significant uptick in home loan applications coming through to ANZ,” he said.
“Most of them are refinancing, as you can imagine, there are not a lot of new home loan purchases for obvious reasons.
“But a lot of people, I imagine, are sitting at home thinking, ‘The future’s a little bit more uncertain than it was, we should probably look at where we can save a few dollars here and there’.”
Investor volumes dry up
Conversely, the APRA data has reported that neither of the big four banks reported growth in their investor lending portfolios.
NAB and Westpac recorded the sharpest contractions, down approximately $700 million to $108.7 billion and $179.8 billion, respectively.
ANZ’s investor home loan portfolio also thinned, down approximately $400 million, from $85.4 billion to $85 billion, while CBA’s book remained stable at $156.8 billion.
Weakness in the investor lending segment offset owner-occupied book growth, causing ANZ and Westpac to report contractions in their overall mortgage books, down approximately $300 million to $245.6 billion and $100 million to $408 billion, respectively.
Meanwhile, CBA’s overall mortgage book grew $1.8 billion to $449 billion, while NAB’s overall portfolio grew by approximately $400 million to $261.5 billion.