You can't help but shed a tear for the poor old banks at the moment as they face a downturn in their residential mortgage business.
The latest figures from the Reserve Bank show banks approved just $7.188 billion of new residential mortgages in August, down $665 million (-8.5%) from July, and down $369m (-4.9%) compared to August last year.
But don't pass the tissues just yet, because fortunately for the banks the downturn in new mortgage business is not quite as bad as those figures suggest.
That's because a reasonable chunk of the new mortgages being approved each month arises from people switching banks. When someone switches their mortgage from one bank to another, the new bank writes it up as a new mortgage. But overall, it's not adding to the total mortgage pile.
If we remove mortgage switching from the equation, then the total value of new mortgages approved in August was $5.381 billion, down 3.7% compared to August following an 8.0% annual decline in July.
Of course that doesn't flow straight through to the banks' bottom lines, because when they write up a new mortgage, the interest they charge can provide them with an income stream for the next 10, 20 or even 30 years, and the latest decline in new mortgage approvals comes after a period of spectacular growth.
However any business that sees the amount of new business coming through their door declining compared to where it was a year earlier would be concerned.
The big concern for the banks will be that the recent declines in mortgage business continue.
Underlying that drop in business are annual declines in both top ups of existing mortgages and mortgages being approved for the purpose of buying a property, and both of these have shown significant declines.
New mortgage lending for top ups and property purchases both declined by 5.8% in August compared to August last year, following a 12.5% annual decline in July for property purchases.
Given the currently soft outlook for the property market, and the generally cautious approach to new debt being taken by many households, the banks might be facing a fairly cool summer on the residential lending front.
The graph below shows the monthly trends in new mortgages approvals by their main types.
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