A new report reveals the value of home loans in Australia struck $1.3 trillion in the March 2015 quarter as investors piled money into property, and the home loan market is expected to reach new highs this year as owner occupiers and investors seek to capture strong property returns, according to the head of new banking business act., Amanda Watt.
The report, the Australian Prudential Regulation Authority (APRA)’s Quarterly Authorised Deposit-taking Institution (ADI) Property Exposures for the March 2015 quarter, reveals the total size of ADIs’ housing loans grew 1.9% or $23.9 billion from the December 2014 quarter and was up 9.0 per cent or $107.1 billion from a year earlier.
There were 5.3 million housing loans outstanding with an average balance of $243,000 as at March 31, 2015. A significant proportion of these loans, or 37.4%, were interest-only loans, according to the APRA data. Of home loans approved just in the March 2015 quarter, 42.3% were interest-only loans, reflecting the flood of investor money into property.
The March quarter report reveals owner occupier home loans accounted for 65.4% of home loans, rising to a fresh high of $852 billion, an increase of 1.5% from the December 2014 quarter and up 7.2% from a year earlier. Investment loans accounted for 34.6% cent of all home loans, totalling a record $450.2 billion, up 2.6% from the previous quarter and a jump of 12.4% from a year earlier
Major banks held the bulk of home loans at $1.06 trillion while other domestic banks held $148.6 billion on 31 March 2015.
act.’s Amanda Watt said the data highlights the huge size of Australia’s home loan market as Australians continue to pour their savings into property at a time when returns from term deposits and other cash investments are low.
“Given interest rates remain at very low levels, we are likely to see this strong flow of money continue into the property market through the remainder of 2015 and into 2016,” said Watt.
“While property prices in Sydney and Melbourne remain at very high levels, record low interest rates and the stabilisation of property prices in some smaller capital cities will likely improve home loan affordability, attracting first home buyers,” said Watt, who heads up act., a new division of Community Sector Banking – a collaboration between Bendigo Bank and Community 21.
act. is a newly established banking service that redirect profits back into social projects. For each product we have, whether home loans, credit cards or savings accounts, we allocate ‘impact dollars’ – real dollars taken from the profit we earn – and we give them back to our customers, who can then donate to a project of their choice listed on letsact.com.au, whether they are focussed on the environment, homelessness or protecting animals,” said Watt.
“The amount of impact dollars a customer generates depends on the act. banking product they choose and their banking habits. Home loans will create the greatest amount of ‘impact dollars’. For example, a customer that holds an average first home loan size of $330,000 mortgage with act. could generate approximately $41 a month to reinvest in the social project of their choice,” said Watt.
“The calculator on act.’s banking page reveals how impact dollars customers generate each month by banking with act. The process is transparent and effective and it enables property investors to give something back to social causes they choose by opting for an act. home loan,” she said.