The RBA published their financial aggregates to June 2014, and rounds outs the picture we discussed yesterday. Looking at lending aggregates first, we see investor housing moved up 8.7% in the 12 months to June 2014, whilst owner occupied lending grew over the same period by 5.3%, thus, combined, housing grew 6.4% in the past year. Business lending grew, but was boosted by the provision of bridging loan facilities associated with the re-structure of a domestic corporate entity, and personal credit was up by 3.5% over the last 12 months.
We can show the monthly data, which highlights how housing lending has been moving. The growth in investment lending is clear.
Turning to the value lent, housing lending reached a new record, $1.375 trillion.
Looking at the split between owner occupied and investment lending, the stronger growth on the investment side is again clear,
and is at a new record of 33.73% of all housing loans outstanding.
Looking at how the banks are funding this lending growth, we see overall growth in deposit growth slowing
and overseas funding rising.
The continued growth in investment lending will drive house prices higher, and bloat the bank’s balance sheets, but is not economically sustainable. Ever greater leverage into the housing sector remains a concern. That said, data from our latest household surveys, just in, highlights that investors are getting a second wind, so more growth in likely. Updated survey results will be released next week.
