The pace of lending to the private sector by financial institutions in Australia has maintained its recent pace in September. Lending to home owners continued to be the main driver of loan growth while the rate of growth in lending to the business sector remained well below its long-term average.
According to the latest RBA figures, private sector credit grew by 0.3% in September, down from the 0.5% growth recorded in August. The year-to-September growth rate of 5.4% was on par with August’s comparable figure of 5.4% (after revisions), but this this figure is well below previous growth rates in the 1990s and 2000s (see chart below). Since 1990, the average annual growth rate of private sector loans in Australia has been a bit over 8%.
The overall increase was driven by owner-occupier loans, which increased by 0.5% over the month or 6.3% for the 12 months to September. Business credit only rose by 0.1% and its annual growth rate dropped back from August’s 4.4% to 4.3% in September (after revisions). These two types of lending account for nearly three-quarters of new loans by value and thus any change in them has a greater effect in overall credit growth. However, investor loans have been growing at a faster rate since 1990 and this segment has become a larger part of overall lending.