While banks continue to be under the microscope of regulators and the banking royal commission, home buyers seem to be running towards non-bank lenders for mortgage loans.
Citing a study by ANZ, the Business Insider Australia reported that there is a rise in home loans issued by non-banks, increasing by roughly 13% in annual terms. This is significantly higher than the banks' issuance growth which was only at 4.8%.
With this, the share of non-bank lenders to the overall housing debt went up to 7.7%, a 110 basis point increase from to 6.6%.
For ANZ economists Daniel Gradwell and Shaurya Mishra, this goes to show that the stricter regulations set forth by the APRA do not quite apply to the entire market.
"It appears that non-bank lenders are making the most of their position outside of APRA’s regulatory net," Gradwell and Mishra said in a note.
It is important to note that non-bank lenders are not able to help pick up the slack in the investor lending market. In fact, while their loans to owner-occupiers did increase by 17%, investor loans rose by just 2.5%.
"A stronger lending appetite across the non-bank sector is welcome news for the housing market," the two said.
However, Gradwell and Mishra explained that the increase in non-bank lending would not offset the broader slowdown in credit growth.
"We continue to expect that credit availability will weigh on housing prices and construction, both of which are expected to decline for some time yet," ANZ said.