The pace of lending to the non-bank private sector by financial institutions in Australia stabilised in July. However, it may be just a pause in its descent of the past three-years after reaching a post-GFC peak in October 2015.
According to the latest RBA figures, private sector credit grew by 0.4% in July, up from the 0.3% growth rate in June and above the 0.3% consensus estimate. The year-to-July growth rate remained unchanged at 4.4% after revisions as personal loans and lending to investors stagnated.
Westpac senior economist Andrew Hanlon’s view was the month-on-month increase is likely to be short-lived. “This better outcome for total credit is likely to be a temporary respite from the current slowdown. Tighter lending conditions and rising funding costs will continue to weigh on the housing sector over coming months. House prices have turned, following a strong run, and dwelling approvals are down from the 2016 peak and are likely to move lower still after an extended upswing, to bring them more in line with underlying requirements.”