Australia plunges towards outright deleveraging

The Reserve Bank of Australia (RBA) has released its private sector credit aggregates data for the month of October 2019:

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

A long-run breakdown of owner-occupied credit (0.44% MoM; 1.26% QoQ; 4.79% YoY) and investor credit (-0.02% MoM; -0.19% QoQ; -0.18% YoY) is provided below:

Overall annual mortgage growth has tanked to another all-time low of 3.04%, with especially sharp falls in investor credit growth, which has turned negative:

However, the below chart shows that quarterly mortgage growth has posted a modest rebound over recent months:

This has been driven by owner-occupiers, whereas investor mortgage growth is negative:

Overall, mortgage credit growth remains disconnected from the boom in house prices as Aussie households deleverage.

Leith van Onselen

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