RBA sees subdued demand for credit
July 31, 2009
The Reserve Bank of Australia has today released their monthly analysis of private sector credit, discovering total credit provided to the private sector by financial intermediaries rose by 0.1 per cent over June 2009, reversing a fall of 0.1 per cent over May. Over the year to June, total credit rose by a robust 3.4 per cent.
Housing credit was again the major catalyst, increasing by a further 0.6 per cent over June, following an rise of 0.5 per cent over May. For the year to June, housing credit rose by 7.1 per cent. The increase in housing credit in June was mostly due to growth in lending to owner-occupiers, with only weak growth in lending to investors, according to the central bank.
Volatile building approvals aside, this year’s housing data has been exceptional given the global turmoil, with home lending rising and house prices recovering as interest rates and first home owner grants stimulate interest. And the latest data has also suggested that investors are steadily returning to the market.
Other personal credit fell by 0.3 per cent over June, following a decline of 0.4 per cent over May. Over the year to June, other personal credit fell by 7.0 per cent, reflecting a large decline in margin lending.
Business credit, which has been weak this year, fell by a further 0.5 per cent in June, continuing a steady decline since reaching a peak in November last year. Most of the decline in business credit has been due to falls in foreign currency denominated lending. This reflects the appreciation of the Australian dollar and some reduction in the stock of foreign currency denominated lending. Over the 12 months to June, business credit rose by 0.5 per cent.
The leading indicator of business confidence has recently recovered resulting in expectations that the softness in business credit could be overcome in the months ahead. Concerns still linger, however, about the inability of some businesses to gain access to credit due to tighter lending restrictions.