Summary: Private sector credit maintains modest growth rate in February; under expected figure; “turned the corner”; housing credit growth continues, business loans steady; past three months data a “significant turnaround” from mid-2020.
The pace of lending to the non-bank private sector by financial institutions in Australia has been trending down since late-2015. Private sector credit growth appeared to have stabilised in the September quarter of 2018 but the annual growth rate then continued to deteriorate through to the end of 2019. The early months of 2020 provided some positive signs but they disappeared in April and have not re-emerged as yet.
According to the latest RBA figures, private sector credit growth continued at a modest rate in February, rising by 0.2%. The result was under the generally expected figure of 0.3% but in line with January’s increase. The annual growth rate slipped from 1.7% in January to 1.6%.
“Credit to the private sector, while soft early in 2020, has turned the corner,” said senior Westpac senior economist Andrew Hanlan.
Owner-occupier and investor loans accounted for all the net growth over the month. Lending to the business sector was flat and personal debt fell again.
The traditional driver of loan growth rates, the owner-occupier segment, grew by 0.6% over the month, slightly faster than January’s 0.5%. The sector’s 12-month growth rate accelerated from 5.7% to 5.9%.
Growth rates in the business sector remained sluggish and business credit remained unchanged after rounding, up from -0.1% in January. The segment’s annual growth rate went into reverse, slowing from January’s rate of 0.5% to -0.2%.