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Upcoming changes to Lending to Households and Businesses

Information paper to inform users of a new publication containing monthly finance statistics from the Oct 2019 release

Release date and time

Introduction

The purpose of this paper is to inform users of changes to the ABS publication, Lending to Households and Businesses, Australia (cat. no. 5601.0).

From December 2019, the publication will be based on a new, improved data collection, called the Economic and Financial Statistics (EFS) collection that will enhance the quality of information available. To better reflect the new content, the publication will be renamed Lending Indicators, Australia (cat. no. 5601.0). The first issue of the new publication will contain October 2019 data and will be released on 17 December 2019.

The new publication will include:

  • new data collected for the first time; and
  • data conceptually similar to that published in the existing publication, but with improved quality due to updated reporting instructions and definitions. This will result in level shifts across most series.
     

Some existing series will no longer be collected and some will be suspended from publication pending further analysis of the newly collected data. Overall, there will be more housing data available in the new publication, Lending Indicators, compared with Lending to Households and Businesses but fewer data items will be available on business loan commitments. The ABS plans to increase the content of this publication over time.

The new Economic and Financial Statistics collection

As part of its role, the Australian Prudential Regulation Authority (APRA) collects data from financial institutions for the Australian Bureau of Statistics (ABS) and the Reserve Bank of Australia (RBA). Some of the forms used to collect data from Authorised deposit-taking institutions (ADIs) and Registered Financial Corporations (RFCs) have not been updated since the early 2000’s. Over the past few years, APRA, the ABS, the RBA and industry have worked together to modernise the collection. This has been a large and complex project, involving considerable collaboration between the three agencies and industry. The new set of forms and related guidance is called the Economic and Financial Statistics collection.

EFS will give better quality data through, for example:

  • much better guidance on what to report, so institutions can provide consistent data
  • updated definitions to align with international standards for compiling economic statistics; and
  • more detailed data on home loans including to investors and first home buyers.
     

The EFS collection will increase the reliability and accuracy of the data published in Lending Indicators. One of the most important changes is the increased detail and precision in definitions of the data to be reported. These definitions are accompanied by comprehensive guidance to assist ADIs and other reporting institutions provide consistent data.

Reporting on the new forms commenced for July 2019 data for a three month parallel run with the existing collection to allow time to assess the effects of changes in the reporting basis before publishing the new data.

There will be changes to levels and some movements due to clearer reporting guidance on how to report concepts and classifications such as ‘residency’, ‘loan purpose’ and ‘industry’.

Time series

Backcasting

Where new concepts are sufficiently similar to the current concepts, the ABS will produce an historic series back to July 2002 (i.e. a backcast series) and in most cases will produce seasonally adjusted statistics. The levels of the historic series will change due to the improved reporting and updated definitions of concepts.

Newly collected data (the new data items are outlined later in this paper) will not be backcast or seasonally adjusted. Four data points (July 2019 – October 2019) will be available in the December release.

Seasonal adjustment

The approach to seasonal adjustment will be similar to the method used in the existing publication:

  • Detailed series will be directly adjusted. There will be no reconciliation of directly adjusted components with directly adjusted totals and as a result these components will not add to totals in seasonally adjusted terms
  • Indirect adjustment will be applied at a relatively high level, where it can be shown to improve the seasonal adjustment
     

Data quality

The changes to the concepts and classifications are significant. There is a high likelihood of revisions in future reporting periods as APRA, the ABS and the RBA continue to work with ADIs and other reporting institutions to ensure consistent reporting that aligns with instructions and definitions, and the impacts on seasonality can be measured. It is expected data quality will continue to improve over time.

Specific changes

The ABS plans to restrict the content in this product to a set of key series initially and to publish more detail later. This includes suspending the publication of some existing series, as outlined below, until additional data points are collected. Overall, the ABS will be publishing more detailed housing data than is available from the current Lending to Households and Businesses product and will be adding to it over time.

Relationships between old and new series

A concordance is available for download attached to this information paper to inform where there are either direct matches between old and new series, or approximate matches. There are two main changes with the new publication to note when concording old and new series:

  • The headline series for households for the purposes of housing was previously total dwellings and in the new publication this has changed to be total housing. Total housing loan commitments now includes new loan commitments for land and for alterations and additions, in addition to loan commitments for dwellings. Total housing loan commitments is available for owner occupiers, investors and total.
  • By lender type categories will also change. For some key headlines series for lending to households, the new lender type categories are Major Banks, Other ADIs, and Non-ADIs. These categories differ in composition to the old categories. Details about what each category includes will be in the explanatory notes of the new publication.
     

Household lending indicators

New loan commitments to households include those for the purposes of housing and personal finance.

New data items available from the EFS collection will include:

  • Number of new loan commitments to investors. The current forms collect the number and value of new loan commitments to owner-occupiers but not the number of new loan commitments to investors (only the value). The EFS collection includes the number of new loan commitments to investors for the first time, for each state and territory as well as Australia.
  • Investor lending by purpose. The current forms collect detail on new loan commitments to owner occupiers by purpose. For investors, only the total value of new loan commitments is currently collected. Lending Indicators will include the same level of detail for both owner occupiers and investors, for each state and territory as well as Australia. Purpose categories include ‘construction of dwellings’, ‘purchase of newly constructed dwellings’ (such as off-the-plan) and ‘established dwellings’.
  • Investor First Home Buyers. Data about first home buyers is currently collected only if the buyer is an owner occupier, not if a buyer’s first home is for investment purposes. The number and value of new loan commitments to all first home buyers, whether the purpose is for owner occupation or for investment, are included in the new EFS collection. First home buyers statistics will be published in original terms only, split by owner occupier, investors and total.
  • Residential land. Lending to households for the purchase of residential land is currently reported as Personal Finance. In the new EFS collection, lending for land is considered to be a component of lending for housing, to better meet user needs.
     

The key changes to existing data for housing include:

  • The number and value of lending commitments to owner occupier first home buyers (FHB) will change. This is partly as lenders have improved their identification of first home buyers and partly because of an improvement to the way that loans are counted. Many users construct a FHB ratio to analyse FHB activity relative to the rest of the housing market. There are many changes in EFS that will impact both the number of FHB loan commitments and the total number of owner occupier commitments to varying degrees which will in turn affect the derived ratio. For example, reporting by loan purpose (as discussed below) is expected to change the total number of owner occupier commitments but likely won’t have a large effect on the number of first home buyers.
  • Reporting of loan purpose will change, including an expected shift from owner occupier to investment loans. An underlying principle of EFS is that loans will be classified by their purpose, which differs from the current reporting forms where loans tend to be classified by their product type. This will affect whether a loan is classified as being an owner occupier loan or an investor loan and will also affect whether a loan is for housing or personal purposes. EFS now defines owner occupier loans as being only for the customer’s principal place of residency, meaning a customer can generally only have one owner occupier loan. If they have more than one owner occupier loan product, then the products which are not for their principal place of residence will be reclassified to an ‘investor’ loan for the purposes of EFS reporting. Loans for purposes other than housing (buying a car, for example) but secured by a dwelling are often classified as housing finance but, in many cases, with new EFS statistics, will be classified to the purpose of the loan (as personal finance if the purpose is to buy a car, for example). The ABS expects an increase in the number of investor loan commitments (because some of these would previously have been classified as owner occupier loans) and an increase in personal loan commitments (because some of these would previously been classified as housing loans).
  • The number of loan commitments is likely to fall due to changed reporting. Many lenders currently report the number of loan accounts, even if two or more loans are for the same dwelling. It has become increasingly common for borrowers to finance each dwelling with more than one loan, such as a split loan with a fixed and variable interest rate component. In the revised EFS collection, lenders will report the number of loan facilities; a single loan facility includes all the loan products that are used to finance a dwelling when it is purchased. For example, a housing loan application to be split 25/75 into fixed interest rate and variable interest rate products may be recorded as two new loan accounts but would be regarded as one lending facility. This change should reduce the total number of loan commitments compared with current reporting.
     

Business lending indicators

There are significant changes to what data is being published for new loan commitments to businesses. These changes include:

  • The suspension of some series for a period of time. One example is new loan commitment to businesses by industry.
  • Some series are no longer collected, including some total commitments by purpose and lending commitments by state.
  • New data will be available for new loan commitments to small and medium businesses by detailed purpose, and by state for the purchase of property and construction.

Data downloads - time series spreadsheets

Mockup table 1. Households ; housing finance ; total housing ; by property purpose ; new loan commitments ; values

Mockup table 2. Households ; housing finance ; total housing ; by property purpose ; by lender type ; new loan commitments ; values

Mockup table 3. Households ; housing finance ; owner occupiers ; by detailed purpose ; new loan commitments ; numbers and values

Mockup table 4. Households ; housing finance ; owner occupiers ; total housing excluding refinancing ; by state ; new loan commitments ; numbers and values

Mockup table 5. Households ; housing finance ; owner occupiers ; by detailed purpose ; new loan commitments ; New South Wales ; numbers and values

Mockup table 6. Households ; housing finance ; owner occupiers ; by detailed purpose ; new loan commitments ; Victoria ; numbers and values

Mockup table 7. Households ; housing finance ; owner occupiers ; by detailed purpose ; new loan commitments ; Queensland ; numbers and values

Mockup table 8. Households ; housing finance ; owner occupiers ; by detailed purpose ; new loan commitments ; South Australia ; numbers and values

Mockup table 9. Households ; housing finance ; owner occupiers ; by detailed purpose ; new loan commitments ; Western Australia ; numbers and values

Mockup table 10. Households ; housing finance ; owner occupiers ; by detailed purpose ; new loan commitments ; Tasmania ; numbers and values

Mockup table 11. Households ; housing finance ; owner occupiers ; by detailed purpose ; new loan commitments ; Northern Territory ; numbers and values

Mockup table 12. Households ; housing finance ; owner occupiers ; by detailed purpose ; new loan commitments ; Australian Capital Territory ; numbers and values

Mockup table 13. Households ; housing finance ; investors ; by detailed purpose ; new loan commitments ; numbers and values

Mockup table 14. Households ; housing finance ; investors ; total housing excluding refinancing ; by state ; new loan commitments ; numbers and values

Mockup table 15. Households ; housing finance ; investors ; by detailed purpose ; new loan commitments ; New South Wales ; numbers and values

Mockup table 16. Households ; housing finance ; investors ; by detailed purpose ; new loan commitments ; Victoria ; numbers and values

Mockup table 17. Households ; housing finance ; investors ; by detailed purpose ; new loan commitments ; Queensland ; numbers and values

Mockup table 18. Households ; housing finance ; investors ; by detailed purpose ; new loan commitments ; South Australia ; numbers and values

Mockup table 19. Households ; housing finance ; investors ; by detailed purpose ; new loan commitments ; Western Australia ; numbers and values

Mockup Table 20. Households ; housing finance ; investors ; by detailed purpose ; new loan commitments ; Tasmania ; numbers and values

Mockup table 21. Households ; housing finance ; investors ; by detailed purpose ; new loan commitments ; Northern Territory ; numbers and values

Mockup table 22. Households ; housing finance ; investors ; by detailed purpose ; new loan commitments ; Australian Capital Territory ; numbers and values

Mockup table 23. Households ; housing finance ; first home buyers ; by state ; new loan commitments ; numbers and values

Mockup table 24. Households ; housing finance ; first home buyers ; owner occupiers ; by state ; new loan commitments ; numbers and values

Mockup table 25. Households ; housing finance ; first home buyers ; investors ; by state ; new loan commitments ; numbers and values

Mockup table 26. Households ; housing finance ; non-residents ; new loan commitments ; numbers and values

Mockup table 27. Households ; personal finance ; fixed term loans ; by purpose ; new loan commitments ; values

Mockup table 28. Households ; personal finance ; revolving credit ; new loan commitments ; values

Mockup table 29. Businesses ; business finance ; finance leases ; by purpose ; new loan commitments ; values

Mockup Table 30. Businesses ; business finance ; fixed term loans ; by purpose ; new loan commitments ; values

Mockup table 31. Businesses ; business finance ; fixed term loans ; small business size ; by purpose ; new loan commitments ; values

Mockup Table 32. Businesses ; Business finance ; Fixed term loans ; Small business size ; By State ; New loan commitments ; Values

Mockup table 33. Businesses ; business finance ; fixed term loans ; medium business size ; by purpose ; new loan commitments ; values

Mockup table 34. Businesses ; business finance ; fixed term loans ; medium business size ; by State ; new loan commitments ; values

Mockup table 35. Businesses ; business finance ; fixed term loans ; large business size ; by purpose ; new loan commitments ; values

Data downloads - data cubes

Series ID concordance mapping