The pace of lending to the non-bank private sector by financial institutions in Australia has been trending down since 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 and the latest figures have just continued the downtrend.
According to the latest RBA figures, private sector credit grew by 0.2% in April, down from March’s growth rate of 0.3% but in line with the consensus estimate. The annual growth rate slipped from March’s figure of 3.9% to 3.7% as home lending grew at a mediocre rate while business lending and personal lending further contracted.
ANZ economist Hayden Dimes said recent regulatory amendments, expectations of interest rate cuts and the election outcome would cushion credit growth in the short term. “Although we do not expect a sharp rebound in housing credit, we do expect it to improve over the coming months. This reflects the changes to the mortgage affordability floor made by APRA, the boost in housing sentiment from the election outcome and the anticipated interest rate cuts by the RBA. The housing credit impulse has flattened slightly consistent with house price falls stabilising.”