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. The first two months of 2019 have provided more of the same and growth rates have further deteriorated.
According to the latest RBA figures, private sector credit grew by 0.3% in February, an increase on January’s figure and more than the 0.2% consensus estimate. However, the annual growth rate slipped from January’s figure of 4.3% to 4.2% as home lending continued to slow.
A month ago, Westpac senior economist Andrew Hanlan said the housing market was the prime determinant and he expanded on this theme after the latest figures. “New lending for housing is contracting, declining by 20% in 2018, with the second half of the year particularly weak, down 15%. Weakness has become more broadly based, including owner-occupiers. Lending to both investors and owner-occupiers fell by around 15% over the second half of 2018.”