The pace of lending to the non-bank private sector by financial institutions in Australia has been trending down since it peaked in October 2015. It stabilised in July and picked up a little in August and September but some economists expect the downward trend to continue unless business lending can take over from lending to purchase homes.
According to the latest RBA figures, private sector credit grew by 0.4% in October, the same rate as for September’s revised figure and in line with the consensus estimate. The year-to-October growth rate remained unchanged for a second consecutive month at 4.6% as lending to owner-occupiers and the business sector offset lower growth rates elsewhere.
ANZ economist Jack Chambers described the result as a “soft” one, with the combined growth rate of the owner-occupier and investor segments lower than September’s combined rate. As a result, he expects “that house prices will continue to decline through 2019.”