The RBA have released their Financial Aggregates for October 2016. Housing grew 0.6%, making an annual rate of 6.4%, still well above inflation. Personal finance was static, whilst business lending rose 0.5% making an annual rate of 4.4% (in original terms).
Looking at the seasonally adjusted data set, investment lending is growing at 5.3% and rising, owner occupied lending is 7.1% and falling, business lending is growing at 4.4% and falling, and other personal finance is down 1.1%. Investment lending is the only element to rise.
Looking at the detailed data, seasonally adjusted, owner occupied lending rose 0.54% in the month, by $6.6 billion, to $1.04 trillion, investment lending rose 0.59%, by $3.3 billion to $560 billion, and business lending rose 0.27%, by $2.3 billion to $864 billion.
We see therefore a fall in the relative share of lending to business, compared with housing, and the momentum in investment housing stronger than owner occupied housing. Both signs of trouble ahead. Investment lending is 35% of all housing, and business lending 33% of all banking lending.
There were further adjustments to loan classification in the month, just to confuse further. The RBA said:
Following the introduction of an interest rate differential between housing loans to investors and owner-occupiers in mid-2015, a number of borrowers have changed the purpose of their existing loan; the net value of switching of loan purpose from investor to owner-occupier is estimated to have been $46 billion over the period of July 2015 to October 2016, of which $0.8 billion occurred in October 2016. These changes are reflected in the level of owner-occupier and investor credit outstanding. However, growth rates for these series have been adjusted to remove the effect of loan purpose changes.
