Australian banks Australian interest rates

Banks chew through the interest-only mortgage reset

Thursday, 13 September 2018

APRA released its quarterly property data yesterday and gave us another insight into how the banks are chewing through the interest-only reset. Mortgage flow of interest-only loans remains very subdued:

And that is starting to put a material dent the outstanding stock of interest-only loans:

The total is now down from a peak of $583bn in March 2017 to $461bn five quarters later. Given banks have issued $95bn in new interest-only loans in that time we’ve seen as much as $200bn reset in outstanding interest-only loans already. The total refinancing task out to 2021 is roughly $450bn so the banks have gotten materially ahead of the curve.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.