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 appeared to have stabilised in the September quarter of 2018 but credit figures in the December quarter put paid to that idea. January’s figures have provided more of the same.
According to the latest RBA figures, private sector credit grew by 0.2% in January, the same as December’s figure but less than the 0.3% consensus estimate. The annual growth rate slipped from December’s revised figure of 4.4% to 4.3% as investor lending continued to stagnate and personal lending contracted at a quicker pace.
Westpac senior economist Andrew Hanlan said the housing market was the prime determinant. “Key to this trend has been the housing sector. Housing credit growth has slowed over recent years: from 7.4% in 2015; 6.3% in both 2016 and 2017; to 4.7% in 2018. The latest annual reading is 4.4%.”
The figures were not terribly surprising and there were also December quarter capex figures with which to contend. By the end of the day, the yield on 3-year Treasury bonds remained unchanged at 1.64% while 10-year and 20-year yields had both increased by 3bps to 2.10% and 2.49% respectively, broadly following higher US bond yields, especially at the long end. Cash futures were also largely unaffected, with a rate cut 80% priced in by the end of November and fully factored in by February 2020.