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Analysis of recent data has pointed to distinct trends in lending across the board which are surfacing so far this year.
CoreLogic research analyst Cameron Kusher has analysed recent data from APRA and found that restrictive lending policies have pushed down residential mortgages for both investors and owner-occupiers.
In the data over the March 2019 quarter, $72.395 billion was made out in residential mortgages, which was 17.9 per cent lower than the last quarter and 16.5 per cent lower than the same quarter last year.
The declines in lending to investors were above these figures, declining by 18.7 per cent over the quarter and 19.6 per cent compared to this time last year.
Meanwhile, lending to owner-occupiers was slightly above the overall figures, with declines of 17.6 per cent for the quarter and 15.2 per cent for this time last year.
The total value of interest-only loans is at $10.785 billion, making up only 14.9 per cent, down below its previous peak of 45.6 per cent in June 2015, and makes up 23.3 per cent of all outstanding loans, down from the peak of 39.5 per cent in June 2015 and September 2015. All of these data points are at record lows, according to Mr Kusher.
Low documentation loans, other non-standard loans and loans approved outside of serviceability all saw declines in value and proportion, with the two former at historic lows of 0.1 of a percentage point of all lending and the latter at the lowest since December 2017 at 4.3 per cent of all lending.
Loans with a loan-to-value ratio over 80 per cent, however, saw a rise, with the proportion of these loans out of all loans at 21.8 per cent for the quarter, the highest since March 2017, but the total value, $15.772 billion, was the lowest value on record.
“It is a little surprising that given the current tight credit conditions and falling dwelling values that there is an increased willingness to lend to borrowers with less than a 20 per cent deposit,” Mr Kusher said.
The results of the declines in most of the loans, Mr Kusher said, are a sign that the mortgage market is looking to reduce signs of risk, and he expects the next quarter of data to continue this trend.
“Thereafter it will be interesting to see what happens, given that there has been an interest rate cut and it looks as if APRA will be relaxing some of the serviceability limits in place on mortgages,” he said.
“On the other side of things, comprehensive credit reporting is being implemented which is likely to mean even more scrutiny on borrowers’ debts and subsequently increased pressure on lenders to write high-quality mortgages.”