The pace of lending to the non-bank private sector by financial institutions in Australia fell again for a fifth consecutive month in January. Lending has slowed to such a degree APRA chief Wayne Byres said the 10% cap on lending to real estate investors was probably “redundant”.
According to the latest RBA figures, private sector credit grew by 0.3% in January, the same as the 0.3% growth rate recorded in December and less than the 0.4% expected. The year-to-January growth rate of 4.9% also remained unchanged from December’s revised figure of 4.9% as business lending went into reverse (-0.1%) and owner-occupier loans and investor loans maintained their respective 0.6% and 0.2% per month growth rates.
The overall increase was driven by owner-occupier loans, which increased by 0.6% over the month or 8.0% for the 12 months to January. Business credit growth slowed from a 0.1% growth rate in December to -0.1% in January although its annual growth rate increased after four consecutive months of falls, this time from 3.2% to 3.4%. 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.