5601.0 - Lending Indicators, May 2020 Quality Declaration 
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 09/07/2020   
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Important data quality note
From July 2019 onwards, data in this publication has been sourced from the Economic and Financial Statistics (EFS) collection, a new and improved data source. There have been extensive and ongoing discussions with lenders about the EFS collection. Data quality is expected to continue to improve over time, as lenders become accustomed to the new reporting basis and further refine the data they report. This process is likely to lead to revisions, including to the historical time series.

Identified data quality issues

Please note that specific data quality issues have been identified with the reporting of detailed housing loan purpose categories, particularly for loan commitments for the purchase of newly erected dwellings. Some loan commitments for the purchase of existing dwellings are being incorrectly reported as being for the purchase of newly erected dwellings. The magnitude of misreporting for this issue is still being investigated.

There are also issues with the reporting of credit card data in personal finance, mainly for new and increased credit limits, however the net impact of these issues is still being investigated. Some lenders are incorrectly reporting reactivated or replacements cards as new borrower accepted commitments, while other lenders are not reporting the full amount of a new borrower accepted commitment when a credit limit increase occurs.

Lender type breakdowns
Lender type breakdowns for Major banks, Other Authorised Deposit-taking Institutions (ADIs) and Non-ADIs are only available in this publication from July 2019 onwards. It is likely that more information about lender-type breakdowns will become available in the coming months.

Coronavirus (COVID-19) impacts in May data
The World Health Organisation (WHO) commenced daily situation reports of the coronavirus (COVID-19) outbreak on 21 January 2020 and identified it as an international health emergency on 30 January. From 1 February, the Australian Government placed travel restrictions on those travelling to Australia from mainland China. In March, regulations to encourage social distancing saw further impacts on the ability of businesses to trade as normal, and restricted mass public gatherings such as open houses or auctions.

There were uneven COVID-19 effects on housing loan commitments in May. For housing, the number and value of loan commitments for existing dwellings fell strongly, reflecting restrictions in late March and April on open houses, auctions and people's mobility in general. The Reserve Bank of Australia's (RBA) term funding facility (TFF) has allowed lenders to offer attractive fixed rate loans, which have driven a sharp increase in refinancing commitments where customers change lender to refinance their home loan. May's rise in fixed term loan commitments for personal finance reflects a small bounce back in activity after April's sharp fall, which was due to COVID-19 impacts. Although the headline statistics about business loan commitments do not show obvious COVID-19 effects, lenders have reported commitments accepted by small and medium businesses due to the Commonwealth Government's Small and Medium Enterprise (SME) Guarantee Scheme, the values of which are significant in the context of lending to SMEs.

The ABS and APRA are also actively managing the potential risks from COVID-19 to data collection operations. The ABS appreciates the support of APRA and lending institutions in continuing to provide the data used to compile this publication.

Suspension of trend series
The trend series attempts to measure underlying behaviour in lending activity. In the short term, this measurement will be significantly affected by changes to regular patterns in lending that will occur during this time, as potential home buyers face uncertainty about their job security, for example. If the trend estimates in this publication were to be calculated without fully accounting for this irregular event, they would likely provide a misleading view of underlying lending activity.

It may be some time before the underlying trend in lending activity can be accurately estimated. The Lending Indicators trend series have therefore been suspended starting from March 2020. The trend series will be reinstated when more certainty emerges in the underlying trend in lending.

Update to seasonal adjustment methods
Lending Indicators uses the concurrent seasonal adjustment method, meaning that seasonal factors are re-estimated each time a new data point becomes available. If not appropriately accounted for, unusual real-world events, such as COVID-19, can distort estimates calculated using this method. From April 2020, seasonal factors are being calculated using data up to and including March 2020, then projected from April 2020 onwards. This approach, known as the forward factor method, ensures that the seasonal factors are not distorted by COVID-19 impacts.



Key statistics

In May 2020, new loan commitments (seasonally adjusted):

  • fell 11.6% for housing
  • rose 14.5% for personal fixed term loans
  • rose 3.6% for business construction
New loan commitments
May 2020
Month percent change
Year percent change
$b
%
%

Seasonally adjusted

Households
Housing
16.42
-11.6
1.8
Owner occupier (a)
12.31
-10.2
7.3
Investor (a)
4.10
-15.6
-11.9
Personal
Fixed term loans
1.43
14.5
-10.8
Businesses
Construction
1.97
3.6
-26.0
Purchase of property
4.26
-2.0
-35.4

(a) Loan commitments for owner occupier, investor housing and personal fixed term loans exclude refinancing.



Key graphs

Due to the effects of COVID-19 the value of new loan commitments for housing experienced the largest monthly fall in the history of the series
New loan commitments, total housing (seasonally adjusted), values, Australia

New loan commitments, total housing (seasonally adjusted), values, Australia


Fixed term loan commitments for personal finance are at low levels despite a pick up in new loan commitments for road vehicles
New loan commitments, personal fixed term loans (seasonally adjusted), values, Australia

New loan commitments, personal fixed term loans (seasonally adjusted), values, Australia




Strength in the value of business loan commitments for dwelling construction drove the rise in construction during May but purchase of property fell reaching the lowest level in six months
New loan commitments, business finance by purpose (seasonally adjusted), values, Australia

New loan commitments, business finance by purpose (seasonally adjusted), values, Australia


New ABS website
The ABS will be launching a new website in 2020. You will soon be able to see how this release will appear on the new website by exploring our Beta site. Regular users of this information are encouraged to explore the Beta site and consider if this will affect the way you access and consume ABS data and information. If you would like more information on the new ABS website, or want to discuss how the transition to the new site might impact you, please email newABSwebsite@abs.gov.au.


Forthcoming issuesRelease Date

June 2020 5 August 2020
July 2020 9 September 2020
August 2020 9 October 2020
September 2020 10 November 2020