The Reserve Bank of Australia (RBA) has just released the private sector credit aggregates, which registered a small increase in total credit in the month of May, but the equal second lowest monthly housing credit growth in the series’ 35-year history and the lowest annual mortgage growth ever recorded:
Total credit provided to the private sector by financial intermediaries rose by 0.5 per cent over May 2012, after rising by 0.4 per cent over April. Over the year to May, total credit rose by 4.0 per cent.
Housing credit increased by 0.3 per cent over May, following an increase of 0.4 per cent over April. Over the year to May, housing credit rose by 5.1 per cent.
Other personal credit increased by 0.1 per cent over May, after decreasing by 0.3 per cent over April. Over the year to May, other personal credit decreased by 1.6 per cent.
Business credit increased by 0.8 per cent over May, after growing by 0.7 per cent over April. Over the year to May, business credit increased by 3.3 per cent.
A chart showing the long-run breakdown in the components is provided below:
Personal credit growth (+0.1% MoM; -0.1% QoQ; -1.6% YoY) rose slightly, but remains lower over the year. Business credit (0.8% MoM; 2.3% QoQ; 3.3% YoY) and housing credit (0.3% MoM; 1.1% QoQ; 5.1% YoY) grew over the year, but at subdued levels relative to their long-run average growth rates.
Focusing on the housing market, annual credit growth hit a fresh all time (35-year) low of 5.14%. Monthly housing credit growth (0.34%) was also the equal second lowest recorded result in the series’ history (see below chart).
Finally, a breakdown of owner-occupied credit and investor credit is provided below:
What is most worrying about this result is that it follows the RBA’s -0.5% cut in official interest rates in early-May. While it is only one-month’s data, these figures imply that this rate cut had absolutely no impact on mortgage demand which, in fact, took another leg down over the month.
We now await the release of the Australian Bureau of Statistics May housing finance statistics in a few week’s time.
