The Reserve Bank of Australia (RBA) has just released the private sector credit aggregates, which registered a small increase in total credit growth in the month of July, but the third lowest monthly housing credit growth in the series’ 35-year history and the lowest quarterly and annual mortgage growth ever recorded:
Total credit provided to the private sector by financial intermediaries rose by 0.2 per cent over July 2012, after rising by 0.3 per cent over June. Over the year to July, total credit rose by 4.2 per cent.
Housing credit increased by 0.3 per cent over July, following an increase of 0.3 per cent over June. Over the year to July, housing credit rose by 4.9 per cent.
Other personal credit decreased by 0.3 per cent over July, after falling by 0.2 per cent over June. Over the year to July, other personal credit decreased by 1.5 per cent.
Business credit increased by 0.1 per cent over July, after growing by 0.5 per cent over June. Over the year to July, business credit increased by 4.2 per cent.
A chart showing the long-run breakdown in the components is provided below:
Personal credit growth (-0.3% MoM; -0.4% QoQ; -1.5% YoY) fell over the month and remains lower over the year. By contrast, business credit continued its modest recovery (0.1% MoM; 1.4% QoQ; 4.2% YoY), which is good news, but housing credit (0.3% MoM; 0.9% QoQ; 4.9% YoY) grew over the year, but at subdued levels relative to their long-run average growth rates.
Focusing on the housing market, quarterly and annual credit growth hit fresh all time (35-year) lows of 0.94% and 4.87% respectively. Monthly housing credit growth (0.33%) was also the third lowest recorded result in the series’ history, and the series is now in a down trend (see below chart).
Finally, a breakdown of owner-occupied credit and investor credit is provided below:
Once again, the data suggests that the recent -0.75% cut to official interest rates has had minimal impact on mortgage demand which, in fact, has taken another leg down over the past few months.
Twitter: Leith van Onselen. Leith is the Chief Economist of Macro Investor, Australia’s independent investment newsletter covering trades, stocks, property and yield. Click for a free 21 day trial.
