QUALITY DECLARATION - SUMMARY

INSTITUTIONAL ENVIRONMENT

The Australian Bureau of Statistics (ABS) produces Lending to households and businesses from two main sources. The majority of data are sourced from the Australian Prudential Regulatory Authority (APRA), while the ABS collects data for lenders that are not required to report to APRA. Final quality assurance and analysis of all data is conducted by the ABS.

The ABS operates within a framework that includes the Australian Bureau of Statistics Act 1975 and the Census and Statistics Act 1905. The Census and Statistics Act 1905 (the CS Act) provides the Australian Statistician, who heads the ABS, with the authority to conduct statistical collections and, when necessary, to direct a person to provide statistical information.

APRA is the independent statutory authority for the prudential regulation of the Australian financial services industry. The authority for APRA to collect data is granted under the Financial Sector (Collection of Data) Act 2001, which established APRA as the national statistical agency for the Australian financial sector. For more information about the roles and responsibilities of the organisation, see the APRA website.


RELEVANCE

Lending to households and businesses presents statistics for new commitments for the reference month by significant lenders for financing households and businesses in Australia. It includes:

• finance commitments for the construction, purchase, refinancing or alterations of owner occupied dwellings;
• finance commitments for the construction, purchase or refinancing of dwellings for rent or resale (investment housing);
• personal finance commitments;
• fixed and revolving finance commitments to businesses, and
• lease finance commitments to businesses.

Depending on the category of counterparty and loan purpose, these commitments may be classified by:

• state and territory;
• ADIs and non-ADIs;
• first home buyers and non-first home buyers;
• fixed rate loans, secured revolving credit and other loans;
• industry of counterparty

It is important to note the distinction between a financing commitment and actual financing activity. For example, housing finance commitments are not a direct measure of financing, sales or construction in the residential dwelling market. A commitment exists once the home loan application has been approved, and a loan contract or letter of offer has been issued to the borrower. A commitment to lend will therefore exist only after the property has been found and valued and mortgage insurance arranged (where relevant). The actual advancement of funds may not occur in the same month or necessarily at all.


TIMELINESS

Lending to households and businesses is released monthly, 28 working days after the end of the reference month.

All tables in Lending to households and businesses contain data from lenders' monthly reporting of new finance commitments to either APRA or the ABS.


ACCURACY

Lending to households and businesses has no sampling error since it does not select providers to be in sample but attempts to enumerate all providers in scope that meet the specified coverage. Lending to households and businesses also has low non-response rates. As with all surveys, Lending to households and businesses does have non-sampling error arising from inaccuracies in collection, recording and processing. Every effort is made to minimise non-sampling errors by the careful design of questionnaires, contact with providers and efficient data processing procedures.

Revisions to previously published statistics are included in the publication as they occur.

Financial institutions subject to prudential regulation are obliged to report information to APRA directly. Data for these institutions are then provided to the ABS for inclusion in Lending to households and businesses. Data for other lenders, such as wholesale lenders, are directly collected by the ABS. Lending commitments by all banks are covered. Since January 2014 when a monthly reporting threshold was introduced, lending commitments by non-banks constituting 95 per cent of the non-banks sector's assets are covered.

When APRA commenced the collection in 2001, lending commitments by non-banks with total assets of $50 million or more were covered. All banks' lending commitments were covered.

Until the statistics in this publication were derived from returns submitted to the Australian Prudential Regulation Authority (APRA), the statistics of housing finance commitments covered all banks and permanent building societies. The largest of the remaining lenders of secured housing finance for owner occupation were included so that, together with banks and building societies, at least:

• 95% of total Australian finance commitments;
• 90% of each state and territory total commitments; and
• 70% of finance commitments by wholesale lenders were covered.

The Explanatory Notes contain further detail on scope and coverage.


COHERENCE

There have been few changes in the forms and reporting requirements since the commencement of the precursor publications Housing Finance and Lending Finance in 1975. Between 2001 and 2003, the ABS passed the responsibility of data collection for regulated institutions to APRA, leading to only a small portion of data still collected directly by the ABS. During this transition, care was taken to ensure there were no interruptions to time series. APRA and ABS questionnaires are similarly worded to ensure consistency in data. This is discussed in detail in the Explanatory Notes.

Occasionally a financial institution may change its institution type, for example, from a non-ADI to and ADI. The reclassification caused by such a change is reflected in the month it occurs, and earlier periods are not revised.

Details of the establishment of new banks are recorded in the 'Series breaks' tabs of Statistical Table B2 on the Reserve Bank of Australia's website: RBA Statistical Tables.


INTERPRETABILITY

Statistics are generally provided in trend, seasonally adjusted and original terms. The trend series smooths out the volatility in the data including removing seasonal effects (such as the number of trading days and moving holidays), and is therefore considered the best indicator of underlying movements. The seasonally adjusted series removes the seasonal effects but does not smooth out the volatility in the data. The original series neither removes the seasonal effects nor smooths out the volatility in the data.

Both seasonal and trend estimates, by their nature, are subject to revisions over time. In most instances, the larger revisions will be to the previous month and the same month a year ago. For more information regarding seasonal adjustment and trend series, refer to the Time Series Analysis Frequently Asked Questions (cat. no. 1346.0.55.002).

Definitions are listed in the Glossary.


ACCESSIBILITY

The ABS produces many publications that complement Lending to households and businesses, some of which are listed in the Explanatory Notes.

Enquiries can be made to the National Information and Referral Service.

Alternative data sources include the APRA Statistics website and the Reserve Bank of Australia's Bulletin. They include a large number of tables of financial statistics, mostly sourced from the ABS and APRA.