[F5] Indicator lending rates

F5 INDICATOR LENDING RATES

Due to the nature of these data sources, these rates are indicative only and are likely to be regularly revised. The RBA continuously reviews a variety of sources for lending rate data and may make changes to the series provided here as a result.

Data are compiled on the last working day of the month. Data are subject to series breaks relating to changes in the sample of reporting institutions and lending products over time.

Business lending rates are the predominant or average indicator rates offered by major banks on loans to small businesses. The definition of small businesses differs between banks but is generally based on annual turnover, number of employees, amount of borrowings or deposits with the particular bank, or a combination of these. In some cases, a margin is added when setting rates on individual loans, although loans secured by residential property generally do not attract a risk margin. Since early 1998, banks have differed in their approaches to determining risk margins: for some banks, these margins vary according to the type of security offered; for others, they vary based on the riskiness of the customer; risk margins also vary from lender to lender. The effect of changing pricing policies and products has been to introduce breaks in the series.

‘Term’ refers to fully-drawn loans with a fixed maturity. ‘Small overdraft’ refers to those loans that are below the minimum size that qualifies for other variable rates to small businesses (for example, advertised overdraft indicator rates often apply only to loans of more than $20 000). The ‘3-year fixed’ rate is the average rate charged to small businesses for residentially-secured loans. 'Weighted-average interest rates' reported here are calculated from statistical table D7, but also incorporate supplementary interest rate data for interest rate bands below 4 per cent collected by the RBA and exclude an estimate of foreign currency and intra-group lending. For these series, small business loans are those facilities less than $2 million, while large business loans are those facilities $2 million and above. The ‘large business variable rate’ is the banks’ indicator rate prior to December 1993.

‘Housing loan’ rates are those quoted for loans to owner-occupiers and investors respectively. Rates for ‘Banks’ and ‘Mortgage managers’ are the average rates of large lenders in each group. ‘Standard’ rates apply to housing loans with facilities such as the option to redraw or make early repayments. ‘Basic’ rates are those on loans with limited options. ‘Discounted’ rates are the interest rates that are offered on standard variable rate housing loans as part of professional packages. Where a bank offers a tiered product, with different rates depending on the size of the loan, the rate applying to a loan equal to or greater than $250 000 is used. ‘Three-year fixed’ rates are those on bank loans where the interest rate cannot be varied for the first three years of the loan.

‘Personal loan’ rates are the average rates of the large lenders in each group.

‘Term loans (unsecured)’ refers to instalment loans with terms up to seven years. Where a lender offers a tiered product, with different rates depending on the term and amount of the loan, the rate applying to a $15 000 3-year loan is used.

‘Credit cards – Standard’ refers to standard Visa and MasterCard accounts with an interest-free period. Prior to February 2006, the standard credit card series also included Bankcard rates. ‘Credit cards – Low rate’ refers to Visa and MasterCard accounts with an interest-free period, but with fewer features than standard credit cards.

‘Home equity loans’ refers to the indicator rates on revolving, variable rate loans secured by residential property.

‘Margin loans’ are revolving, variable rate loans backed by approved securities (usually Australian equities or managed funds). Where tiered rates are quoted, the rates applying to a $200 000 loan where interest is paid in arrears are used.

Several previously published figures were revised in the data published on 3 October 2018. The revisions reflect the inclusion of information from additional sources.

'Securitised housing loans' data show average interest rates on outstanding housing loans from the Securitisation Dataset, which covers around a quarter of the market for housing loans and includes information on the loans underlying both marketed securitisations and ADIs’ self-securitisations. These data provide useful indicators of developments in home lending, although loans in the dataset may have different characteristics from those not covered by the dataset. See Kent C (2017), ‘Some Innovative Mortgage Data’, Speech at Moody's Analytics Australia Conference 2017, Sydney, 14 August. See also Kohler M (2017), ‘Mortgage Insights from Securitisation Data’, Speech at Australian Securitisation Forum, Sydney, 20 November.

'Securitised housing loans' data are available with a one month lag. The data are available from mid 2015.

In the 'Securitised housing loans' data 'Principal & Interest' refers to the interest rates on loans where borrowers are required to make regular principal and interest repayments, while 'Interest-only' refers to the interest rates on loans where borrowers are only required to make interest payments.

In the April 2020 release of F5, the following series were discontinued: - Lending rates; Small business; Variable; Residential-secured; Overdraft - Lending rates; Small business; Variable; Other; Term - Lending rates; Small business; Variable; Small overdraft - Lending rates; Small business; 3-year fixed - Lending rates; Housing loans; Mortgage managers; Variable; Standard - Lending rates; Housing loans; Mortgage managers; Variable; Basic - Lending rates; Securitised housing loans; Average outstanding variable rate - Lending rates; Securitised housing loans; Average outstanding variable rate; Owner-occupier; Principal & Interest - Lending rates; Securitised housing loans; Average outstanding variable rate; Owner-occupier; Interest Only - Lending rates; Securitised housing loans; Average outstanding variable rate; Investor; Principal & Interest - Lending rates; Securitised housing loans; Average outstanding variable rate; Investor; Interest Only - Lending rates; Personal loans; Term loans (unsecured); Fixed - Lending rates; Personal loans; Term loans (unsecured); Variable - Lending rates; Personal loans; Revolving credit; Home equity loans - Lending rates; Personal loans; Revolving credit; Margin loans Alternative series are published in Tables F6–F8.

Two series were renamed in the April 2020 release of F5. The series Lending rates; Small business; Variable; Residential-secured; Term was renamed Lending rates; Small business; Variable; Term. The series Lending rates; Small business; Variable; Other secured; Overdraft was renamed Lending rates; Small business; Variable; Overdraft. The name changes did not affect the content of the series.