Increase in lending bodes well for economic recovery

A rise in lending to businesses for the second straight month, coupled with an increase in finance commitments of home-buyers, has provided a glimmer of hope that Australia may yet avoid recession.

The Australian Bureau of Statistics has today reported that the value of commercial finance commitments rose by a seasonally adjusted figure of 6.5% in January compared to December 2008; the first time there has been consecutive monthly rises since the beginning of 2007.

Lending for housing finance also rose, 2.3% in seasonally adjusted terms, another sign that demand for housing is not going to fall off a cliff unlike what has been seen in a number of other countries. Last years increase in the First Home Owners Grant (FHOG) has been credited with boosting the housing sector along with the sharp decline in interest rates.

Total lending commitments were still down 29% on last January but the decline has steadied, as the previously stagnant credit markets begin to open up again.

Posted Monday 16th of March 2009, 5:35 PM