RP Data’s Cameron Kusher has this morning posted an interesting blog showcasing the banks’ increasing dominance of Australian mortgage lending, whose share has risen to nearly 96% from just under 94% a decade ago:
…the total amount of outstanding mortgage debt to banks as at February 2013 was $1.147 trillion, to all ADI’s it was $1.2 trillion. The data shows that banks are overwhelmingly the most popular institutions for mortgages in Australia, accounting for 95.8% of all outstanding mortgages. Of course the banking sector in Australia is dominated by four major players; ANZ, Commonwealth Bank (CBA), National Australia Bank (NAB) and Westpac. These four major banks, excluding CBA’s subsidiary BankWest but including Westpac’s subsidiary St George, hold 85.1% of all outstanding mortgage debt by banks operating in Australia and 81.5% of all outstanding mortgage loans to domestic ADI’s. These figures indicate that more than four out of every five mortgages in Australia are to either ANZ, CBA, NAB or Westpac.
The banks’ increased mortgage share has arguably been at the expense of Australian businesses, with seperate Reserve Bank data showing the proportion of bank loans to businesses shrinking from 63% in 1990 to 34% currently, with housing’s share of loans increasing from 24% to 59% over the same period (see next chart).
At the same time, the banks’ expanding asset base (mostly mortgages) has been funded, to a large extent, by foreigners, with bank gross external liabilities increasing from 8% of GDP in 1988 to 42.5% currently (see next chart).
Anyone seeking a clue as to what has fuelled the massive expansion in house prices and mortgage debt across Australia since the 1990s need look no further than the above charts.