Money in the bank drops for the first time in a year

Money in the bank from households has fallen for the first time in a year, recording a sizable $11.5 billion drop in just one month.

This is just the second drop in household deposits since the start of the rate hikes, according to the APRA monthly banking statistics, released for June 2024.

That said, money in the bank from households is at a near record high. At $1.47 trillion, it is $98.59 billion more than it was the same time a year ago, and almost $200 billion higher than it was in the month before the rate hikes began (April 2022 vs June 2024).

Note: deposits from households include term deposits, transaction accounts, mortgage offset accounts and savings accounts on the books of authorised deposit-taking institutions (ADIs).

Total deposits by households, June 2024

Source: APRA monthly authorised deposit-taking institution statistics.

Total deposits by households since the start of the rate hikes: APRA

Source: APRA monthly banking statistics.

June drop likely to be a blip, not a trend despite cost-of-living pressures

A drop in total household deposits in the month of June is not uncommon. 

Since March 2019, there have just been five instances where the total money in the bank has fallen, and three of them were in the month of June (drops were June 2019, November 2019, May 2021, June 2023 and June 2024).

July, however, is typically a bumper month for deposits.

While many people are struggling to make ends meet under the ever-growing cost-of-living pressures, household deposits are likely to rise in the next set of APRA data for July 2024, as people put the money they get back from their tax returns and the stage three tax cuts in the bank for safekeeping.

Monthly change in total household deposits: APRA

Source: APRA, RateCity.com.au

Home loan books continue to grow

The total value of housing loans to households - which includes both owner-occupier and investor loans - increased by $14.88 billion in the month of June, or 0.7 per cent.

CBA led the way in terms of home loan growth this month, with an impressive $4.15 billion increase to its loan book, a rise of 0.7 per cent.

Macquarie continues to post noteworthy gains with a $1.74 billion (1.5%) increase to its loan book between May and June 2024 and a $13.33 billion (12.5%) rise compared to the previous year – larger than CBA’s year-on-year rise, even in dollar terms, with Australia’s biggest bank increasing by $12.68 billion (2.3%).

The ANZ-Suncorp merger, which was completed yesterday, will see ANZ leapfrog big bank competitor NAB in relation to the value of residential mortgages and deposits, rising to a market share of 16.0 per cent.

Big four banks + Macquarie + Suncorp: loans to households, housing: June 2024

Source: APRA. *Authorised deposit-taking institutions. Note: loans to households: housing is total of both owner-occupier and investor loans as recorded by APRA.

RateCity.com.au research director, Sally Tindall, said: “Money in the bank from households dropped for the first time since last June, as households dipped into funds stashed in their savings, transaction and offset accounts.”

“End of financial year sales is a popular time to buy big ticket items and likely to be one of a range of reasons for the drop” she said.

“While many families have been eating away at their savings for months, it’s highly likely we’ll see deposits rise again in July as people stash money back from their tax returns in the bank.

“Households across the country have been unevenly impacted by both the rate hikes and the sharp rise in living expenses. Some people don’t have a spare dollar to their name while others are sitting on the biggest nest eggs they’ve had in their lives.

“The total value of housing loans among ADI’s grew by a sizable 0.7 per cent in the month of June  – the largest rise in percentage terms since June 2022. 

“Australia’s biggest bank led the charge this month, with an impressive $4.15 billion increase to its home loan book.

“ANZ, in the month of June was still Australia’s fourth largest home loan lender, however, the bank will leapfrog NAB into third place with the now-completed acquisition of Suncorp’s banking arm,” she said.

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