Lending weak, except for house purchases

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

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.

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:

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

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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  1. “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:”

    BUT does this include refinancing?

  2. I work for a major bank, and very recently at a staff gathering, the head of Consumer Finance basically said their aim is to increase their mortgage book as much as possible. It is their highest earner (in terms of ROE) so a large amount of investment dollars go toward it.

    Then they mentioned the FSI, at which point he was cursing David Murray for ‘targetting his portfolio’.

    It was at this point I realised this is self-interest at its best…

    • Nope.
      Why work when you can specufest! Epically more profitable, less work, less tax… and boy it makes one gorgeous looking.

      • Exactly Andy

        There is nothing else to invest in, in this country, but real estate. APRA no bloody APRA, makes no damned difference whatsoever. That’s why lowering interest rates was never going to ooost anything but housing
        I give you Exhibit 1. Truck driver from Toll pulled up at my place Friday afternoon. I like to have a friendly chat. So. after .loading him, while he was strapping down securely wrapped pallets inside a Tautliner (ridiculous enough) he told me of one of their drivers was fined a mint last week. He had two loose cartons, 5 kg each, not strapped down – this is inside a tautliner! As well, the morons fined him for not having his straps strapped down. FFS!

        Who would invest in an economy so totally deranged. Note this is only going to get worse as these clowns must keep on inventing more ridiculous rules to justify their overpaid non-productive jobs!

        The country is totally rooted! No APRA RBA/MB zero interest rate crap is going to do anything but make the situation worse!

        NOTE – In a measurte of productivity these morons who invented this stupidity and enforce it are counted as 1 i.e. they are said to have no effect on productivity and, nominally, their employment ADDS to GDP, Can there be anything more so stupid as GDP and Productivity measurement?

      • Ha! Doesn’t surprise me. Somebody I know had one of their trucks defected last week because of a slow air leak on the B trailer (rear trailer on a b double.) Apparently it was “dangerous” like it was…

        Anybody who knows anything about trucks will know that you need to apply air to release the park brakes, meaning that if you lose air pressure, you’re highly likely to work it out pretty quickly.

        Actually the fines for minor offences (eg errors in log books) have been rationalised recently with what used to attract fines of $1000’s+ being reduced to a just a few hundred dollars – enough to disincentivise that behaviour but not enough to break these poor buggers.

  3. Reno finance dip is interesting

    Everyone already sucked out enough of their equity mate for a Range Rover and leaving the extension and kitchen for the next owner?

    Or is the ownership debt load just so high there is no room to borrow anymore regardless of equity mate ATM?

    • No sweat, just take advantage of the recent spate of low interest dealer finance offers and wait for the house price to ratchet up enough to consolidate back in to the home loan!