Mutual sector posts strong growth in home lending

By Gerv Tacadena

Strong homebuyer demand has spurred growth among mutual banks, building societies, and credit unions over the past year.

Strong homebuyer demand has spurred growth among mutual banks, building societies, and credit unions over the past year.

According to KPMG Australia’s Mutuals Industry Review 2021, residential lending across the mutual sector increased by 5.1% to $112.4bn during the FY2021.

Overall, the mutual sector managed to record a 38.6% growth in operating profit before tax to $685m and a 7.4% gain in total assets to $148.2bn.

KPMG national sector leader for mutuals Hessel Verbeek said the past financial year was a test of resilience for the mutual sector amid turbulent conditions.

“The mutuals have felt the ongoing impact of the COVID-19 pandemic, however the high growth in the Australian residential housing market in combination with the strong balance sheet position of the mutual sector has boosted mortgage lending performance,” he said.

Business Council of Co-operatives and Mutuals CEO Melina Morrison said the results of the KPMG review underscore the importance of the sector to the national economy.

“The unique member-based business model of mutuals means they are well-placed to withstand the sorts of challenges posed by the pandemic,” she said.

“The fact that so many Australians choose to borrow from mutuals when buying their home also demonstrates the level of trust they’ve earned, as the profit motives of the major banks have come under question in recent years.”

Mutual sector’s stand on housing

Customer Owned Banking Association CEO Michael Lawrence said customer-owned banks are titled towards owner-occupiers, particularly first-home buyers who may be struggling to afford to enter the market.

“First-home buyers in Australia are finding it increasingly difficult to save enough money to buy a home,” he said in the public hearing of the Inquiry into Housing Affordability and Supply in Australia earlier this month.

Mr Lawrence said their share of higher loan-to-value loans as a percentage of new loans is around 13%, higher than the 9% of the broader banking system.

Furthermore, 20 of the 27 participating lenders on the panel of the First Home Loan Deposit Scheme are members of COBA.

“Housing prices as a ratio of household disposable income have climbed from 2.5 times to six times in the past 30 years,” Mr Lawrence said.

“Concerns about housing affordability and home ownership are not new and there have been many inquiries and reports that have examined these issues.”

“The biggest lever governments have to improve housing affordability is to boost supply.”

Photo by Cytonn Photography on Unsplash.

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