Australian banks are selling more mortgages than they were just a year ago, according to the latest data from the Reserve Bank of Australia.
In February, the Australian Prudential Regulation Authority (APRA) released its monthly mortgage figures.
That’s when the ABS said that Australian banks were selling 1.8 million mortgage accounts to the private sector for a combined cost of $17.3 billion.
At the time, the banks’ net assets stood at $17 billion, a figure which, if correct, means the banks were net borrowers of $18.5 billion.
However, the APRA’s latest data showed that, in March, the ABS had revised down the net asset value of Australian banks from $17 to $16.9 billion, meaning they were net sellers of $9.6 billion.
This means the two figures are now closer to one.
The ABS data also showed that the number of mortgages sold to the market fell from 2.7 million in January to 2.4 million in March.
This means that the banks are still selling more than they had sold a year earlier.
However, APRA data also shows that Australian mortgages have been increasing in value in the past year.
APRA data shows that the average selling price of a mortgage has increased by 4.5 per cent in the three months to March, compared to the same period a year before.
AAPRA also reported that the rate of growth in mortgage lending was stable, with a decline in mortgage rates of 3.5 percentage points.
But, as the APMA’s report on March 12 showed, the average rate of change in mortgage loans in the first quarter was 4.1 per cent.
The biggest gainers from the housing market are the big banks.
In the first three months of 2017, the big four banks – Commonwealth Bank, ANZ, Westpac and WestpacWestpacWestcorpANZANZWestpacBankWestpacSouthWestpacSydney-based Commonwealth Bank is the biggest beneficiary of the housing boom.
According to the data released on March 16, the bank sold 1.7m mortgage accounts in the second quarter, an increase of 11.6 per cent from the same quarter a year prior.
And, in the same three-month period, the Bank sold 1 million more mortgage accounts than it did in the year before, increasing its net assets by $1.5 million.
“While it is true that we are selling our portfolios to our customers at higher rates than they are selling them to us, the real gainers are the banks, who are selling the assets to customers at an even lower rate,” Westpac CEO Andrew Mackay said.
“We believe this to be a sustainable and sound strategy to support Australia’s economy and to keep prices stable and attract more investment.”
The banks have also been spending more money on the mortgage servicing business, according the latest APRA figures.
Westpac reported $8.6 million worth of loans servicing loans from January to March this year, an 11 per cent increase from the previous quarter.
In the same time period, ANZA reported $5.4 billion of loans serviced from January-March this year.
The Bank of America-Merrill Lynch data shows the banks also increased their loan servicing costs, with the average servicing cost for a $1 million mortgage rising from $1,100 to $2,400.
In contrast, ANSLA reported a $6.7 billion increase in loans servicing from January – March this decade, an 8.6 percentage point increase from a year previous.
Bank of America, which has been the biggest buyer of mortgage loans, reported a 12 per cent rise in its mortgage servicing costs over the same two-year period, while Westpac reported a 17.3 per cent hike in costs over this same period.
WestPac’s chief executive, Ian Narev, said the rise in costs had come as a result of the increased risk appetite from consumers and investors.
“The cost of mortgage servicing is driven by an increase in the number and value of mortgage default claims and the fact that mortgage lenders are increasingly focusing on the riskier properties that are more expensive to finance,” he said.
Australia’s banks have been buying more properties to lend to borrowers in an effort to keep them on their toes.
Earlier this year the government introduced a $500,000 loan guarantee scheme to assist struggling homeowners with the cost of housing.