The latest RBA credit aggregates to end August 2016, shows that total credit grew again, thanks to higher home lending, which reached a new record of $1.584 trillion. A further $1 billion of loans were reclassified between between owner occupied and investment loans, making $44 billion in total, or 2.8% of all loans.
Seasonally adjusted owner occupied loans grew 0.62% or $6.3 billion, whilst investment lending grew $1.5 billion or $0.27%. Investment loans comprise 34.98% of all home lending, down from a high of 38.6% in June 2015. Business lending went sideways, dropping to 33.2% of all lending, continuing its drift downwards – not a good sign for real future growth. Other personal credit fell slightly.
The 12 month growth analysis shows owner occupied loans sitting at 7.6%, investment loans 4.6%, total housing at 6.5% and business lending at 5.7%. All higher than inflation and income growth. Australia is living with ever higher debt.
The RBA says:
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 $44 billion over the period of July 2015 to August 2016, of which $1.0 billion occurred in August 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.
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