The pace of lending to the non-bank private sector by financial institutions in Australia has continued its three-year descent after reaching a post-GFC peak in October 2015. According to the latest RBA figures, private sector credit grew by 0.3% in June, up from the 0.2% growth rate in May and in line with the consensus estimate. However, the year-to-June growth rate fell from 4.8% to 4.5%, as personal loans stagnated and lending to property investors went backwards.
The overall increase was driven by “owner-occupier” and business loans. Historically, these two segments have been the largest influences on total credit growth, as they account for nearly 75% of outstanding loans. However, since mid-2016, business lending has been less and less influential.
Business credit growth rebounded from a growth rate of +0.0% in May to a +0.3% increase in June, while its annual growth rate slowed from a revised rate of 3.9% to 3.2%. The owner-occupier segment repeated the 0.6% growth rate present in March, April and May while the 12-month growth rate slipped back from 7.9% to 7.8%.