- Macquarie is issuing more loans to Australian property investors, albeit off a low base.
- The increase comes amid a notable slowdown in investor loans issued by the big four banks.
Annual credit growth to Australian housing investors just grew at the slowest level on record in May.
However, data released by UBS today shows some banks have been more active in the investor space than others.
And Macquarie — not traditionally known as a mortgage lender — looks to be leading the charge.
“Macquarie appears to be lending more aggressively to property investors, with its loan book up 6.3% over the last three months (25% annualised),” UBS said.
Among the big four banks, Westpac remains the most aggressive in lending to investors, posting quarterly loan growth of 1.2% (up 6% for the year).
While Macqaurie’s investor loan growth stands out in the above chart, it needs to be viewed in the context of the bank’s exposure to Australia’s mortgage market.
Macqaurie’s 2018 annual report showed its Australian mortgage portfolio amounted to $32.7 billion as at March 2018, which accounts for just 2% of the Australian mortgage market.
Annualised investor loan growth of 25% also looks to be a by-product of a low base figure from the previous year.
Monthly data from APRA showed the total of Macquarie’s investor loans amounted to $9.257 billion in January 2016. They then declined steadily until September last year before picking up again.
This table illustrates the pattern:
So although it’s important to put Macquarie’s headline growth figure into context, the data still indicates that Macquarie is more bullish on investor loans at a time when competitors are pulling back.
“For many years the market reacted positively to banks that grew their lending books above system, driving stronger revenue and earnings,” UBS said.
However, “given the change in housing market conditions, we believe growing market share in investment property is now considered a sign of risk-taking and is no longer viewed positively by the market.”
The analysts forecast more headwinds for major bank earnings in the near-term.
They noted the recent increase in bank funding costs, but said the big four may struggle to follow the lead of regional players and pass those costs on to borrowers, given the current political climate stemming from the banking Royal Commission.
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