The Australian Prudential
Regulation Authority ('APRA') recently released its
latest quarterly property exposure data for domestic and foreign
Authorised Deposit-taking Institutions ('ADI's').
The Property exposures update - September quarter 2018 provides a snapshot of APRA's quarterly property exposures data on commercial and residential sectors.
Loan exposure to foreign bank branches continues to expand,
whilst the number of development loans written has declined in the
12 months leading up to September 2018.
Due to a marked reduction in the proportion of new interest-only loans (now well below the 30% threshold) in December 2018, APRA announced that it would remove the supervisory benchmark on interest-only residential mortgage lending by ADI's that was put in place as a temporary measure in March 2017.
Interest only loans
New interest-only home loan approvals remain near the lowest level since reporting commenced in March 2008, with a slight decrease over the September quarter to 14,407 (15,704, June 2018). The value of approved new interest-only loans in September 2018 was 13.2% lower than in September 2017. A substantial fall in interest only loans as a proportion of total loans was also recorded, with the September 2018 result of 16.1%.
Foreign bank branches
Commercial property exposures for foreign branch banks are now 37.7% higher than the post-GFC low of December 2012. Foreign branch banks represent 5.9% of total exposures at September 2018, up from only 3.4% in December 2012.
An 9.8% decline in exposures to development and subdivisions for the 12 months to September 2018 indicates lenders' general aversion to the land development/subdivisions market. Exposures are down 20.4% from the most recent peak in March 2017.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.