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Impact on the levels of key statistics
Loan commitments for purchasing existing dwellings have decreased while those for new dwellings have increased
The factors contributing to this change are outlined below.
The impact of reporting changes varies by state
This is due to the high level impacts discussed elsewhere in this paper, including the changed coverage, with variable impacts of these changes between states. In addition, some lenders previously used the borrower’s address to identify the property location. In line with the updated reporting guidance for EFS, property location is now reported using either the address of the property being purchased or, if that information is not available, the address of the collateral used to finance the loan. In most cases, the collateral used to finance the loan is the property being purchased. This change has contributed to the relatively larger fall in reported loan commitments in New South Wales.
The number of loan commitments has decreased more than the value of loan commitments
The key contributing factor is that some loans were previously double counted. Although the previous collection asked for the number of dwellings financed, most lenders reported the number of loans. Many dwellings are financed by more than one loan, a fixed rate and a variable rate loan, for example. In EFS these are counted as one loan. This results in a significant decrease in the number of loan commitments. Users deriving average loan sizes will notice an increase by comparison with previously published data because the number of loans has decreased more than the value.
The number of loan commitments to first home buyers has decreased
Factors contributing to this are below.
The impact of this is an increase in the ratio of first home buyer loans to non-first home buyers as there is a larger decrease in the number of total owner occupier loans compared to the decrease in first home buyer loans.
The value of loan commitments to households for personal finance has decreased
The key factor contributing to this is improved classification of lending by purpose and improved reporting guidance. This means that a significant amount of lending that was previously reported as personal finance is now reported as business or housing finance. For example, some loan commitments for investment housing were previously being reported as personal finance.
The value of loan commitments for construction and purchase of property have increased
The key factor contributing to this is improved reporting guidance. Some lending previously classified as lending to households is now better identified as lending to businesses.
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5601.0.55.003 - Information Paper: Impacts of forthcoming changes to Lending Indicators, 2019
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