5601.0 - Lending to households and businesses, Australia, May 2019 Quality Declaration 
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 11/07/2019   
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EXPLANATORY NOTES


INTRODUCTION

1 This publication presents statistics on finance commitments made to households and businesses by significant lenders by combining statistics previously available through Housing Finance, Australia (cat. no. 5609.0) and Lending Finance, Australia (cat. no. 5671.0). Lending to households includes for the purposes of secured housing finance for owner occupation, purchase of investment dwellings (dwellings for rent or resale) and other personal finance. Lending to businesses includes lending for fixed loans and revolving credit, and includes lending for lease finance.

2 A finance commitment is a firm offer to provide finance which has been accepted by the borrower. A commitment exists once the loan application has been approved, and a loan contract or letter of offer has been issued to the borrower.

3 All lending commitments are classified to the Lender category, which is (or will be) the legal lender on the corresponding loan contract. Commitments are published for two lender categories, Authorised Deposit-Taking Institutions (ADIs) and Non-ADIs.

4 Authorised Deposit-Taking Institutions (ADIs) includes:

  • Banks
  • Permanent building societies
  • Credit unions/cooperative credit societies

5 Non-Authorised Deposit-Taking Institutions (Non-ADIs) includes:
  • Registered Financial Corporations (RFCs)
  • Wholesale lenders

6 A register of ADIs is available on APRA’s website, as well as a register of RFCs.


SOURCES

7 For banks, credit cooperatives, building societies and RFCs, the statistics in this publication are currently derived from returns submitted to the Australian Prudential Regulation Authority (APRA). The Financial Sector (Collection of Data) Act 2001 facilitates the collection of statistical data from the financial sector, with APRA established as the central point for collection of both prudential and statistical data. In October 2001, APRA implemented new reporting forms for building societies and credit cooperatives. New reporting forms were implemented for banks in March 2002, and for RFCs in March 2003. APRA commenced collecting loan commitments data from banks, credit cooperatives, and building societies in July 2002, and from RFCs in March 2003.

8 Housing finance commitments for owner occupied housing from banks, building societies and credit cooperatives are derived from the ARF 392.0 Housing Finance form collected by APRA. Housing finance commitments for investor housing from these lenders are sourced from the ARF 394.0 Personal Finance form and the ARF 391.0 Commercial Finance form. Owner occupied housing finance commitments for RFCs are collected on the RRF 392.0 Housing Finance form. Investor housing commitments are collected on the RRF 394.0 Personal Finance form and the RRF 391.0 Commercial Finance form.

9 Electronic versions of the forms for ADIs are available on the APRA website. Reporting standards and guidance are also available under Financial Statements.

10 All other institutions, including securitisation vehicles, are collected directly by the Australian Bureau of Statistics (ABS).


REVISIONS

11 Revisions to previously published statistics are included in the publication as they occur.

12 Changes in the classification of lenders (e.g. the conversion of a non-ADI to an ADI) are reflected in the Lender series from the month of such change. Data for earlier periods for such lenders are not reclassified.


FIRST HOME BUYERS

13 First home buyers are people entering the home ownership market for the first time.

14 The ABS and APRA work with lenders to ensure that all loans to first home buyers are reported, regardless of whether or not they received a First Home Owner Grant. However, in 2014 it was established that some lenders were reporting only loans extended to first home buyers who had also received a First Home Owner Grant, instead of all first home buyers.

15 Corrected historical data reported by some lenders was used to re-estimate the first home buyer statistics from July 2016 to October 2012. Information relating to these revisions and methods of estimating loans to first home buyers can be found in Information Paper: Changes to ABS First Home Buyer Statistics, Australia, 2016 (cat. no. 5609.0.55.004).

16 Between July 2017 and November 2017, first home buyer commitments as a percentage of total owner occupied housing finance commitments recorded strong growth. The increase was driven mainly by changes to first home buyer incentive programs in New South Wales and Victoria. Some lenders continued to have difficulty accurately identifying first home buyers despite earlier attempts to improve reporting. Based on available information the ABS determined that the reporting issues were not of sufficient magnitude to require revisions to ABS first home buyer statistics.

17 The ABS considers these statistics fit for purpose, although users should note that some reporting issues may persist. The ABS is working with APRA and the financial institutions to improve reporting through the implementation of the modernised Economic and Financial Statistics (EFS) collection in 2019.

18 The Owner-Occupier First Home Buyer Ratio should be interpreted with caution. The ratio is calculated by dividing the number of Owner Occupier First Home Buyers by the Total number of commitments to Owner Occupier Dwellings financed (including and excluding refinancing). Changes to the denominator can give the impression that the number of First Home Buyers has grown when it has fallen in absolute terms. For example, if the number of both First Home Buyers and non-First Home Buyers decrease in a particular month, but non-First Home Buyers decreases at a greater rate than First Home Buyers, the ratio of First Home Buyers will increase even though the number of First Home Buyers has fallen in absolute terms.


SEASONAL ADJUSTMENT

19 Seasonal adjustment is a means of removing the estimated effects of normal seasonal variation and ‘trading day effects’. A ‘trading day effect’ reflects the varying amounts of activity on different days of the week and the different number of days of the week in any month (i.e. the number of Sundays, Mondays, etc.). This effect may be partly caused by the reporting practices of the lenders. Adjustment is also made for Easter which may affect the March and April estimates differently. Trading day effects are removed from the original estimates prior to the seasonal adjustment process. Seasonal adjustment does not remove the effect of irregular or non-seasonal influences (e.g. a change in interest rates) from the series.

20 Rapid change in the financial sector, and particularly developments in the provision of housing finance, may cause changes in the seasonal and trading day patterns of the housing finance data.

21 Estimation of seasonal adjustment and trading day factors that reflect the full effect of recent developments is not possible until a sufficient number of years of data have been collected. Accordingly, the trend estimate data provide a more reliable indicator of underlying movement in housing finance commitments. See paragraphs 26 and 27 for further information on trend estimates.

22 State component series have been seasonally adjusted independently of the Australian series. The sum of the state components in seasonally adjusted and trend series are therefore unlikely to equal the corresponding Australian totals.

23 By lender component series have been seasonally adjusted independently of total lender series. The sum of the by lender components in seasonally adjusted and trend series are therefore unlikely to equal the corresponding total lender series.

24 Concurrent seasonal adjustment methodology is used to derive the seasonal adjustment factors in lending to households and businesses statistics. This means that original estimates available at the current reference month are used to estimate seasonal factors for the current and previous months. As a result of this methodology, the seasonally adjusted and trend estimates for earlier periods can be revised each month.

25 Autoregressive integrated moving average (ARIMA) modelling can improve the revision properties of the seasonally adjusted and trend estimates. ARIMA modelling relies on the characteristics of the series being analysed to project future period data. The projected values are temporary, intermediate values, which are only used internally to improve the estimation of the seasonal factors. The projected data do not affect the original estimates and are discarded at the end of the seasonal adjustment process. The statistics in lending to households and businesses are compiled using an individual ARIMA model for the majority of series. The concurrent seasonal adjustment approach re-estimates seasonal factors each month with the receipt of each new observation. The parameters used for seasonal adjustment are routinely reviewed every 12 to 24 months to ensure the quality of the seasonal factors. The last reanalysis occurred in February 2017 for the January 2017 issue. For more information on ARIMA modelling see Feature article: Use of ARIMA modelling to reduce revisions in the October 2004 issue of Australian Economic Indicators (cat. no. 1350.0).


TREND ESTIMATES

26 Smoothing seasonally adjusted series reduces the impact of the irregular component of the seasonally adjusted series and creates trend estimates. These trend estimates are derived by applying a Henderson-weighted moving average to all but the last six months of the respective seasonally adjusted series. Trend series are created for the last six months by applying surrogates of the Henderson moving average to the seasonally adjusted series. For further information, refer to Information Paper: A Guide to Interpreting Time Series-Monitoring Trends (cat. no. 1349.0).

27 While the smoothing technique described above enables trend estimates to be produced for the latest few months, it does result in revisions to the trend estimates as new data become available. Generally, revisions become smaller over time and, after three months, usually have a negligible impact on the series. Changes in the original data and re-estimation of seasonal factors may also lead to revisions to the trend.


ROUNDING

28 Where figures have been rounded, discrepancies may occur between sums of the component items and totals. Published changes in dollar value and percentage terms are calculated using unrounded data and may differ slightly from, but are more accurate than, changes calculated from the rounded data presented in this publication.


ABS DATA AVAILABLE ON REQUEST

29 Statistics for months prior to those shown in this publication and more detailed series are available in spreadsheet format under the Downloads tab. For more information, contact the ABS National Information and Referral Service on 1300 135 070.

30 Statistics prior to July 2002 are available for most series in this publication through existing Housing Finance, Australia and Lending Finance, Australia publications. A series identification concordance is available under the Downloads tab of this publication.


RELATED PRODUCTS

31 Other ABS publications that may be of interest are outlined below. All publications released from 1998 onwards are available on the ABS website:
32 The Reserve Bank of Australia produces the quarterly Reserve Bank of Australia Bulletin as well as data on its website. Statistical Tables D1 and D2 contain data on lending and credit aggregates (including the housing credit aggregate). Table D5 Bank Lending Classified by Sector contains statistics on lending to persons for the purpose of housing, also classified by owner occupiers and investors, with statistics available from January 1990. Table B19 Securitisation Vehicles contains loans outstandings information for mortgages held, which includes both residential and non-residential mortgages.

33 APRA publishes residential lending by ADIs in Monthly Banking Statistics and Quarterly Authorised Deposit-taking Institution Performance Statistics.

34 Current publications and other products released by the ABS are available from the Statistics View. The ABS also issues a daily Release Advice on the ABS website which details products to be released in the week ahead.