The latest credit aggregates data from the RBA revealed that both personal and mortgage credit growth has collapsed, with personal loan growth declining by 5.0% in the year to January 2020 and mortgage growth tracking at just 3.1% – just above lowest level in recorded history:
The decline in mortgage credit growth comes at the same time as Australian dwelling values are rocketing, which is somewhat contradictory:
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).