There has been extensive media coverage of recent changes in the level of owner-occupied housing finance of individual banks as published monthly by APRA in Australian Banking Statistics. These data are used by banks and others as indicators of each banks share of the housing loan market. The latest monthly data are being issued today.
The balance of housing loans outstanding was once a fairly straightforward concept. Loans were made to buy or build a home and gradually repaid, so that in the great majority of cases the outstanding balance of the loan was funding the home rather than some other activity of the borrower. However, with the growth in home equity loans where borrowers use their home as security for a personal overdraft/advance, linking the "purpose" of the loan to the outstanding balance has become a more complex task. The amount of the balance which is funding the house can only be estimated based on sampling of customer behaviour.
As publicly announced by the National Australia Bank recently, that bank has reviewed the manner in which it reports its home equity loan products to APRA. This has resulted in the bank reclassifying a proportion of the outstanding balances of its home equity loans as housing loans; previously the entire balance of these loans had been classified as personal overdraft facilities.
APRA is having discussions with several other banks concerning how they treat their home equity lending products. Arising from this review, some further changes may be made to statistics on the levels of owner-occupied housing finance published for the individual banks.
For further information contact:
Les Phelps
Executive General Manager
Authorised Deposit-Taking Institutions
Phone: (02) 9210 3140
