The latest banking statistics from APRA, to end October 2017 shows that banks continue to lend strongly to households. The overall value of their portfolios grew 0.5% in the month to $1.57 trillion, up $7.3 billion.
Owner occupied loans grew 0.6% to $1.03 trillion, up $6.4 billion and investment loans rose 0.15% of $816 million. The proportion of investment loans continues to drift lower, but is still at 34.8% of all lending (too high!!).
Looking at the monthly movement trends in more detail, we see the “dent” in the trends a couple of months back thanks to CBA’s reclassification of loans from their portfolio. Ignoring that blip, the current policy settings are still too generous. Household debt will continue to rise, despite low wage growth and the prospect of higher interest rates. Risks in the system are still rising.