RDP 9202: Some Tests of Competition in the Australian Housing Loan Market Appendix: Data Sources

(a) Housing Lending

To construct data from May 1986 to December 1990, three consecutive reporting forms were used. All three forms are a statement of banks' liabilities and assets within Australia. Prior to 1989, trading banks submitted a weekly reporting form with categories different to those of the monthly savings bank reporting form. In January 1989, a new reporting form was introduced, which contained more detailed categories of deposit and lending activities. The categories were standardised for trading and savings banks, and they both reported weekly. A third reporting form was introduced in January 1990, but apart from removing the distinction between trading and savings banks, only minor modifications were made.

All housing lending prior to January 1989 was taken from the housing category in the savings bank reporting form. The pre-1989 trading bank reporting forms did not have a category for housing lending, and is thus assumed to be zero. The post-1989 reporting forms showed the amount of total trading bank housing lending was roughly $2.2 billion in January 1989, or about 4 per cent of bank housing. Further details can be found in the Reserve Bank of Australia (RBA) Bulletin, Table B.4, “Lending to Persons”, or Table B.14, “Assets – Individual Banks”. Previously, trading bank housing lending was classified as “Other Lending”, and categorised as “Mainly Business” in RBA Bulletin Table D.4, “Credit to the Private Sector by Financial Intermediaries”.

The post-January 1989 reporting form for trading banks and savings banks contain a more detailed breakdown of the category of housing finance for owner occupation; into secured and unsecured lending. We sum these items to provide a consistent series with the pre-1989 reporting forms. However, some savings banks housing loans were reclassified mainly into other personal, but no information on the size of this transfer is available.

One trading bank bought the housing loan portfolio of the Defence Services Home Corporation in January 1989. It was added to the bank's books over a period of months. No adjustments were made to this bank's housing series.

The latest reporting form, introduced in January 1990, removed the distinction between trading and savings banks, and included a new category; non-owner occupied housing finance. This item includes investment lending for housing to persons and business; see RBA Bulletin Table B.4, footnote (b). This item has been excluded from the housing series used in our study, but may have been partly included in the pre-1989 savings bank reporting form category of housing, and partly as “Other Lending”. No information on the size of the reclassification is available, but in January 1990, the category was $8.5 billion or 14.1 per cent of housing lending. This category is not included in housing lending in Table B.14, and thus the housing lending series of our study is consistent with Table B.14, “Housing”.

(Note that the numbers of the RBA Bulletin Tables quoted above refer to the December 1990 issue but may vary from issue to issue.)

(b) Other Variables

The 90-day bank accepted bill rate is from the RBA Bulletin, Table F.1, “Interest Rates and Yields: Money Market”.

Individual bank interest rates for new housing loans to individuals for owner occupation are from internal RBA sources.

Housing prices are from the Real Estate Institute of Australia, Market Facts, various issues. Housing prices are a weighted average of the following cities: Sydney, Melbourne, Adelaide, Perth and Canberra. Weights are calculated from “Housing Finance for Owner Occupation, Australia”, ABS Cat. No. 5609, on the basis of each city's share of total housing finance.

(c) The Banks in This Study

The major banks in the housing market are as follows:

The Commonwealth Bank of Australia, including

– Commonwealth Savings Bank

– Commonwealth Development Bank

The merger with the State Bank of Victoria occurred in January 1991.

ANZ Banking Group, including

– ANZ Savings Bank

– National Mutual Royal Bank, and

– National Mutual Royal Savings Bank

The National Mutual Royal Bank was acquired by the ANZ in April 1990.

National Australia Bank, including

– National Australia Savings Bank

– Australian Resources Development Bank

The Australian Resources Development Bank was acquired by the National Australia Bank in October 1989.

State Bank of Victoria, including

– Australian Bank, acquired in February 1989

Westpac Banking Corporation, including

– Westpac Savings Bank

The Commonwealth Development Bank and the Australian Resources Development Bank are specialist banks that did not record housing lending. The Australian Bank did record some housing lending on the new reporting forms but not prior to January 1989. Subsequent Australian Bank housing lending was transferred to the books of the State Bank of Victoria. A complete list of all banks as at December 1990 can be found in Table B.14, RBA Bulletin, February 1991.