Interest.co.nz’s David Hargreaves has posted the below stunning chart showing that Kiwis have leveraged big time into non-productive housing lending, whereas consumer lending has also rebounded hard. By contrast, lending to productive areas of the economy – businesses and agriculture – continues to fall:
While the mortgage borrowing has been mounting and mounting, business lending (by both bank and non-bank lenders) is continuing to decline, falling at an annual rate of 5.3%, which is the largest annual decline since October 2010…
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It’s a stunning chart, which I have tried to replicate for Australia below using the RBA’s private sector credit aggregates:
Like New Zealand, mortgages (+4.4% year-on-year) are the only form of private sector credit that is growing, whereas business credit (-3.0% year-on-year) and personal credit (-7.8% year-on-year) are both declining in annual terms. Personal credit, like in New Zealand, is also rebounding.
However, the divergence between ‘productive’ and ‘non-productive’ lending is obviously not as extreme in Australia.
Nevertheless, Aussies, like their Kiwi counterparts, continue to bet it on the house.