The latest credit data from the Reserve Bank of Australia (RBA) revealed that both personal and mortgage credit growth has tanked, with personal loan growth declining by 4.9% in the year to November 2019 and mortgage growth falling to just 2.9% – the lowest level in recorded history:
The decline in mortgage credit growth comes at the same time as Australian dwelling values are rocketing, which appears contradictory:
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This disconnect has arisen because mortgage credit growth measures two distinct things: 1) the addition to the mortgage stock from new mortgages taken out by borrowers (increases the stock of debt outstanding); and 2) the repayment of mortgage debt by existing borrowers (reduces mortgage debt).
