Loans provided by Australian banks and finance companies increased 0.6 per cent in March from the previous month, matching the biggest monthly increase since January 2009, the Reserve Bank of Australia said today.
Lending for housing increased – but at the slowest pace in at least 35 years.
Loans to consumers to buy houses rose 0.4 per cent from February and advanced 6.6 per cent from a year earlier, according to today’s statement.
While housing credit increased, the gain was the smallest since June last year, while the annual increase was the smallest in the history of the RBA data series, which extends back as far as 1976.
The weakening demand for housing loans adds to signals pointing to softening demand for real estate. Reports out this week indicated capital city home prices are flat or falling, including RP Data-Rismark’s series showing median prices posted their biggest quarterly drop in the survey’s history dating back to 1999.
St George chief economist Besa Deda said the weak borrowing numbers showed a softer housing market.
“This provides further evidence of weakening housing conditions, which has been reflected in moderating house prices,” she said.
“Historically low housing affordability is significantly weighing on house purchases,” Ms Deda said.
“In particular, the last RBA rate hike in November where the variable mortgage rate increased about 40 basis points appears to have put a dent in demand,” she said.
Overall credit nudges higher
The overall credit increase in February was revised to 0.6 per cent from 0.5 per cent, the central bank said. The median estimate of 22 economists surveyed by Bloomberg News was for a 0.4 percent increase. Lending gained 3.6 per cent from a year earlier.
Credit provided to consumers for purchases other than housing advanced 0.6 per cent from a month earlier for an annual rise of 1 per cent.
Lending to companies climbed 1 per cent from February and declined 0.6 per cent from a year earlier.
The annual increase in total credit of 3.6 per cent marks a relatively subdued pace compared with an average annual growth rate of 11 per cent for the preceding decade.
Half of the latest annual rise was recorded in the most recent four months.
Other personal credit outstanding rose 0.6 per cent in March, the biggest monthly rise since December 2009, but an increase of only 1.0 per cent through the year.
Business credit rose by 1.0 per cent in March, the heftiest monthly increase since October 2008, when the global financial crisis came to a head. However, annual growth remained negative, with a fall of 0.6 per cent.
The last time business credit posted an annual rise was in June 2009, the RBA figures showed.
BusinessDay, AAP, Bloomberg
Tags: banks, finance, loans, mortgage, property, real estate