The RBA’s credit aggregates for July 2016 shows that whilst lending grew to a new all time high, the momentum is slackening. Housing lending reached $1.58 trillion, seasonally adjusted, up $7.5 billion, of which owner occupied housing rose by $6.3 billion (0.6%) and investment housing rose by $1.2 billion (0.22%). Investment lending comprises 35.1% of all home loan stock, close to last months figure. Lending to business was up $3.7 billion (0.44%). Lending to business was 33.3% of all lending to the private sector and remains flat.
Looking at monthly trends, growth rates for these series have been adjusted to remove the effect of loan purpose changes so housing lending overall grew at 0.5%, with weakening momentum in owner occupied loans, and a small rise in investor lending after a deep dip earlier.
The 12 month ended growth shows owner occupied housing grew the strongest, whilst weaker investor lending pulled overall housing growth lower to 6.6% (7.3% a year ago) and business lending growth slipped but at 6.2% is higher than the 4.9% from a year ago. Personal credit contracted again, down 0.8%.
The RBA says:
Following the introduction of an interest rate differential between housing loans to investors and owner-occupiers in mid-2015, a number of borrowers have changed the purpose of their existing loan; the net value of switching of loan purpose from investor to owner-occupier is estimated to have been $43 billion over the period of July 2015 to July 2016, of which $1.0 billion occurred in July. These changes are reflected in the level of owner-occupier and investor credit outstanding. However, growth rates for these series have been adjusted to remove the effect of loan purpose changes.
