The pace of lending to the non-bank private sector by financial institutions in Australia eased back a little in October. Lending to home owners continued to be the main driver of total loan growth while the rate of growth in lending to the business sector remained well below its long-term average.
According to the latest RBA figures, private sector credit grew by 0.4% in October, up from the 0.3% growth rate recorded in September. The year-to-October growth rate of 5.3% slipped from September’s comparable figure of 5.4% (after revisions) as personal loans contracted and business and investor loans grew at about the same rate as inflation.
The overall increase was driven by owner-occupier loans, which increased by 0.5% over the month or 6.3% for the 12 months to October. Business credit growth picked up from a 0.1% growth rate in September to 0.3% in October but at the same time, its annual growth rate dropped for the second month in a row, this time from 4.3% to 4.0%. These two segments of total lending account for nearly three-quarters of new loans by value and thus any change in them has a greater effect on overall credit growth.
