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Interest-only loan approvals plummet 55%

Interest-only loan, loans, calculator

Tougher lending regulations are hitting investors hard, with the banking regulator finding approvals for interest-only loans took a 54.9 per cent dive in the last quarter.

Interest-only loans now represent 16.2 per cent, or $61.2 billion, of new home loan approvals, according to the latest data from APRA.

Investor home loan approvals also dropped by 12.4 per cent over the quarter, representing 31.1 per cent of new home loan approvals, a total of $117.5 billion.

Conversely, APRA’s statistics have shown a 4.3 per cent ($10.6 billion) year-on-year rise in owner-occupied lending, which now represents 68.9 per cent ($260.6 billion) of new home loan approvals.

Further, the figures also revealed that mortgages with a loan-to-value ratio (LVR) greater than 80 per cent and less than or equal to 90 per cent decreased, falling by 6.2 per cent ($3.4 billion) to 13.5 per cent ($51.1 billion) of all loan approvals.

A sharper decline was reported for mortgages with LVR greater than 90 per cent, with such loan approvals falling by 12.2 per cent ($3.6 billion), now representing 6.8 per cent ($25.8 billion) of all settlements.

Moreover, the data revealed that the share of new loans approved by majors banks decreased by 1.5 per cent ($5.9 billion) year-on-year, representing $378.1 billion of new loans approved.

In total, $94.6 billion in new loans were approved in the year to 30 June 2018, a 4.1 per cent decline from $98.7 billion in the previous corresponding period.

The average size of loans approved over the same period increased by 4.1 per cent from $261,000 to $272,000.

APRA also reported that asset quality improved over the same period, with the number of impaired facilities decreasing by 13.5 per cent ($1.8 billion) to $11.4 billion as at 30 June 2018.

Australia’s overall mortgage portfolio totalled $1.62 trillion as at 30 June 2018, an increase of $86.6 billion (5.6 per cent) on 30 June 2017.

Interest-only loan approvals plummet 55%
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