Slow recovery in mortgage credit goes on

ScreenHunter_01 Mar. 17 23.04


By Leith van Onselen

The Reserve Bank of Australia (RBA) has released private sector credit aggregates data for the month of June:

Total credit provided to the private sector by financial intermediaries grew by 0.4 per cent over June 2013 after increasing by 0.3 per cent over May. Over the year to June, total credit rose by 3.1 per cent.

Housing credit increased by 0.4 per cent over June following an increase of 0.4 per cent over May. Over the year to June, housing credit rose by 4.6 per cent.

Other personal credit increased by 0.2 per cent over June after decreasing by 0.1 per cent over May. Over the year to June, other personal credit increased by 0.2 per cent.

Business credit rose by 0.5 per cent over June after increasing by 0.2 per cent over May. Over the year to June, business credit rose by 0.9 per cent.

A chart showing the long-run breakdown in the components is provided below:

ScreenHunter_93 Jul. 31 11.34

Personal credit growth (0.2% MoM; -0.1% QoQ; 0.2% YoY), business credit growth (0.5% MoM; 0.9% QoQ; 0.9% YoY) and housing credit growth (0.4% MoM; 1.2% QoQ; 4.6% YoY) remain 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 slow recovery:

ScreenHunter_94 Jul. 31 11.40

Finally, a breakdown of owner-occupied credit (0.3% MoM; 1.0% QoQ; 4.1% YoY) and investor credit (0.6% MoM; 1.6% QoQ; 5.7% YoY) is provided below:

ScreenHunter_95 Jul. 31 11.42

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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      • “Hogan’s Heroes: Drums Along the Dusseldorf(1968)
        Col. Robert E. Hogan: I’ve got a present for you from Carter. He’s made you an honorary Chief of the Sioux tribe.
        [He gives Schultz a feather headdress]
        Sgt. Hans Georg Schultz: [Very excitedly] It’s Bee-yoo-ti-ful!
        [He puts it on and looks in a mirror]
        Col. Robert E. Hogan: He’s also given you a new name, Schultz. You are now Big Chief Running Bear Who Goes Swift And Sure To Beer Garden.
        [Klink enters the room]
        Col. Wilhelm Klink: [Outraged] Or, you could be Big Fat Schultz Who Goes Swift And Sure To The Russian Front!

      • Thanks Bob Sickle….somehow I never tire of Schultz, Klink or Carter. I thought Larry Hovis was a great comic.

      • Indeed Flawse – and when compared to today’s banquet of crap that is present on the idiot box I would gladly jump in that time machine…..

    • Yes TP,

      Recovery is not the quite the word

      “Further deterioration in mortgage Debt goes on”

      Love the Hogan’s Heroes extract!

  1. First we were a nation buying and selling houses off each other. Now we’re reduced to a nations investors buying and selling off each other. Tell me again how this is a good thing?