Market Welcomes Non-bank Rise

Posted on 21/11/2018  
Market Welcomes Non-bank Rise

Non-bank lenders are serving as a “buffer” in the housing market by servicing borrowers that have been turned off by banks’ tighter credit policies, according to ANZ Research.

According to an analysis from ANZ economists Daniel Gradwell and Shaurya Mishra, recent data from the Australian Bureau of Statistics (ABS), the Australian Prudential Regulation Authority (APRA) and the Reserve Bank of Australia (RBA) has highlighted the “divergence” between banks and non-banks.

The economists say that while credit supplied by banks is slowing as a result of tighter serviceability requirements and macro-prudential measures imposed off the back of regulatory scrutiny, non-bank lending is on the rise.

The ANZ analysis reports that while housing credit across the banks increased 4.8% year-on-year, non-bank housing credit rose 13%.  

Because of the accelerated growth, the market share of non-bank housing debt rose steadily, from a recent trough of 6.6% at the end of 2016 to 7.7% as of August 2018.

“It appears that non-bank lenders are making the most of their position outside of APRA’s regulatory net,” they say. “This is not to say that non-bank lenders are playing their own game.”

The analysis also found that most of the increase in credit supplied by non-banks has flowed to owner-occupier borrowers (17% year-on-year), compared to investors (2.5% year-on-year).

The economists say the rise in non-bank market share will help “take some of the edge off” the downturn in credit availability.

“A stronger lending appetite across the non-bank sector is welcome news for the housing market,” they say.

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