Investors drive tepid recovery in mortgage credit
The Reserve Bank of Australia (RBA) has released the private sector credit aggregates data for the month of May:
Total credit provided to the private sector by financial intermediaries grew by 0.3 per cent over May 2013 after increasing by 0.3 per cent over April. Over the year to May, total credit rose by 3.0 per cent.
Housing credit increased by 0.4 per cent over May following an increase of 0.4 per cent over April. Over the year to May, housing credit rose by 4.5 per cent.
Other personal credit decreased by 0.1 per cent over May after decreasing by 0.2 per cent over April. Over the year to May, other personal credit decreased by 0.2 per cent.
Business credit rose by 0.1 per cent over May after increasing by 0.2 per cent over April. Over the year to May, business credit rose by 0.9 per cent.
A chart showing the long-run breakdown in the components is provided below:
As you can see, personal credit growth (-0.1% MoM; -0.1% QoQ; -0.2% YoY) continues to deleverage, whereas business credit growth (0.1% MoM; 0.3% QoQ; 0.9% YoY) and housing credit growth (0.4% MoM; 1.2% QoQ; 4.5% YoY) remains positive in annual terms, but are at subdued levels relative to their long-run average growth rates.
Focusing on the housing market, annual credit growth continues to recover from its all time (36-year) low of 4.40% achieved in March. The below chart shows growth on a quarterly basis, which also shows a tepid recovery:
Finally, a breakdown of owner-occupied credit (0.3% MoM; 1.1% QoQ; 4.0% YoY) and investor credit (0.5% MoM; 1.4% QoQ; 5.5% YoY) is provided below:
Once again, much of the current mortgage demand is being driven by investors, which has also been reflected in recent housing finance data from the Australian Bureau of Statistics.
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