Lending weak, except for house purchases

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By Leith van Onselen

Today’s Lending Finance data for January, released by the ABS, revealed that lending outside of housing remains weak.

The below charts, which track lending on a trend basis, illustrate the current state of play.

First, total finance commitments peaked in June 2014, and have been trending down ever since, down 4.6% since June, despite rebounding in January:

ScreenHunter_6569 Mar. 13 12.10
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The overall fall in finance commitments has been driven by commercial, where the value of commitments has fallen 9.4% since June 2014, despite rebounding in January:

ScreenHunter_6570 Mar. 13 12.13

It’s important to note that around one quarter of commercial loans are lending for property investment, which are growing fast (see my earlier post). This suggests that loans to other commercial enterprises – the productive economy – have fallen fairly sharply.

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Most of the other components of lending have also been weakening. Housing renovation activity has fallen for four consecutive months and is down 6.3% since June:

ScreenHunter_6571 Mar. 13 12.19

Lease finance commitments have been falling sharply, down 12.7% since June:

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ScreenHunter_6571 Mar. 13 12.52

Whereas personal finance commitments have plateaued, up only 1.7% since June but falling over the past few months:

ScreenHunter_6067 Feb. 13 12.19
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The notable exception to all this is owner-occupied housing finance commitments (excluding renovations), which hit a new record in January, up 5.0% since June:

ScreenHunter_6573 Mar. 13 12.54

No doubt about it, our banks are all about housing.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.