5601.0.55.003 - Information Paper: Impacts of forthcoming changes to Lending Indicators, 2019  
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 10/12/2019  First Issue
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Impact on the levels of key statistics

The following section compares levels of the old domestic books collection and EFS for a selection of key aggregates and explains the main reasons for differences. Where data concepts are comparable between the two collections, these level shifts will be backcast in the new publication back to July 2002.

Housing finance

The value of owner occupier new loan commitments has decreased

Dwellings by Housing Purpose (Value)

There are several factors that contribute to the smaller value of loan commitments for total dwellings which are outlined below.

  • Internal refinancing is now being reported separately. Previously, some lenders were incorrectly including internal refinancing as a new loan commitment.
  • EFS now defines owner occupier loans as being for the principal place of residence only. A second home or holiday home, for example, would be counted as an investment loan. This decreases the relative contribution of owner occupier loans and increases the relative contribution of investor loans.
  • The old collection covered loan approvals (i.e. where a lender approves a loan). The borrower wouldn’t proceed with the loan in all cases. The EFS collection measures ‘borrower-accepted commitments’ (i.e. where the borrower signs a contract for the loan).

Loan commitments for purchasing existing dwellings have decreased while those for new dwellings have increased

Owner Occupier Housing by Purpose (Value)

The factors contributing to this change are outlined below.
  • Off the plan purchases are now more consistently reported as purchases of new dwellings because of improved reporting instructions. In the previous collection, a significant proportion of commitments for off the plan purchases was reported as loan commitments for construction. This quality improvement has resulted in a fall in loan commitments for construction and an increase in commitments for new dwellings.
  • Some loan commitments previously reported as for construction are now more accurately reported as loan commitments for residential blocks of land, which is a new category in EFS.
  • Loan commitments for existing dwellings previously included some lending for internal refinancing. Internal refinancing is now reported separately. Introducing the new internal refinancing category has resulted in a fall in reported loan commitments for existing dwellings.

The impact of reporting changes varies by state

Owner Occupier Dwellings by State (Value)Investment Dwellings by State (Value)

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

Owner Occupier Dwellings by State (Number)

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

Owner Occupier First Home Buyers by State (Number)Owner Occupier FHB Ratio (Dwellings) by State (Number)

Factors contributing to this are below.
  • The change in reporting of split loans (to remove double counting) has decreased the number of commitments overall, including to first home buyers.
  • The coverage change has reduced the number of first home buyers reported in the new collection.

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.


Personal finance

The value of loan commitments to households for personal finance has decreased

Personal finance (Value)

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.


Business finance

The value of loan commitments for construction and purchase of property have increased

Business finance (Values)

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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