Markets have been speculating for months about whether the US Federal Reserve would raise interest rates in September. The day has finally arrived, and interestingly, there’s much less certainty now about which way it will go than there was just a few weeks earlier.
In August, more than three-quarters of economists surveyed by Bloomberg expected a rate hike this month. Now, only about half do. Traders were also more certain back then, putting the odds at about 50-50. Now the likelihood of a rate hike based on Fed Funds Futures is about one in four.
The Federal Reserve may be on the verge of lifting rates for the first time in more than nine years because unemployment has dropped to pre-crisis levels, the housing market is the healthiest it’s been in 15 years and the economic recovery, while tepid, has continued.
Investors’ and economists’ uncertainty, meanwhile, has been fueled by weak growth in China, Europe and Latin America, giving the Fed pause about whether now’s the right time to start the return to normal.
There is growing alarm that a rate hike will make things even worse for the rest of the world. The Fed risks creating “panic and turmoil” across emerging markets such as China and India and triggering a “global debt crisis.”
The reality, however, will likely be very different. For one, the Fed lacks the power it once did, meaning the actual impact of a rate hike will be more muted than people think. Second, the effect of uncertainty and speculation may be far worse than an actual change in rates, which is why central bankers in emerging markets are pushing their American counterparts to hurry up and raise them already.
The Fed’s waning influence
The Fed, and more accurately the rate-setting Federal Open Market Committee (FOMC), is simply no longer the center of the universe it once was, because the central banks of China, India and the eurozone have all become monetary policy hubs in their own right.
The US central bank may still be preeminent, but the People’s Bank of China, the Reserve Bank of India, and the European Central Bank are all growing more influential all the time. That’s particularly true of China’s central bank, which boasts the world’s largest stash of foreign currency reserves (about US$3.8 trillion) and increasingly hopes to make its influence felt beyond its borders.
Some argue that central banks in general, not just the Fed, are losing their ability to affect financial markets as they intend, especially since the financial crisis depleted their arsenal of tools. Those emergency measures resulted in more than a half-decade of near-zero interest rates and a world awash in US dollars. And that poses another problem.
All eyes will be on Fed Chair Janet Yellen.Reuters
Can the Fed even lift rates anymore?
The old toolkit of market leverage that the Fed used is losing relevance since the FOMC has not raised rates since 2006. And it has rather frantically been trying to experiment with new methods to affect markets.
The Fed and the market (including companies and customers) are beginning to understand that it’s not a given that the Fed can even practically raise rates any more, at least not without resorting to rarely or never-tried policies. That’s because its primary way to do so, removing dollars from the financial system, has become a lot harder to do.
Normally, one way the Fed affects short-term interest rates is by buying or selling government securities, which decreases or increases the amount of cash in circulation. The more cash in the system, the easier (and cheaper) it becomes to borrow, thus reducing interest rates, and vice versa.
And since the crisis, the Fed has added an enormous quantity of cash into the system to keep rates low. Removing enough of that to discourage lending and drive up rates won’t be easy. To get around that problem, it plans to essentially pay lenders to make loans, but that’s an unconventional approach that may not work and on some level involves adding more cash into the equation.
Uncertainty and speculation
In addition, the uncertainty and speculation about when the Fed will finally start the inevitable move toward normalization may be worse than the move itself.
As Mirza Adityaswara, senior deputy governor at Indonesia’s central bank, put it:
We think US monetary policymakers have got confused about what to do. The uncertainty has created the turmoil. The situation will recover the sooner the Fed makes a decision and then gives expectation to the market that they [will] increase [rates] one or two times and then stop.
While the timing of its first hike is important – and the sooner the better – the timing of the second is more so. This will signal the Fed’s path to normalization for the market (that is, the end of an era of ultra-low interest rates).
Right now, US companies appear ready for a rate hike because the impact on them will be negligible, and some investors are also betting on it.
That’s no surprise. Companies have borrowed heavily in recent years, allowing them to lock in record-low rates and causing their balance sheets to bulge. This year, corporate bond sales are on pace to have a third-straight record year, and currently tally about $1 trillion. Most of that’s fixed, so even if rates go up, their borrowing costs won’t change all that much for some time.
At the end of 2014, non-financial companies held a record $1.73 trillion in cash, double the tally a decade ago, according to Moody’s Investors Service.
Beyond the US, there are reports that Chinese and Indian companies are ready for a rate hike as well.
Foregone conclusion
So for much of the world, a hike in rates is already a foregone conclusion – the risk being only that the Fed doesn’t see it. The important question, then, is how quickly, or slowly, should the pace of normalization be. While the Fed may find it difficult to make much of an impact with one move, the pace and totality of the changes in rates will likely make some difference.
But the time to start that process is now. It will end the uncertainty that has embroiled world markets, strengthen the dollar relative to other currencies, add more flexibility to the Fed’s future policy-making and, importantly, mark a return to normality.
Author: Tomas Hult, Byington Endowed Chair and Professor of International Business, Michigan State University
The Treasury has announced that the small amount credit contract (SACC) laws review panel is seeking views on the effectiveness of the laws relating to SACCs and whether a SACC database should be established. The panel are also calling for submissions on whether the provisions that apply to SACCs should be extended to consumer leases that are comparable to SACCs and, if so, how this would be achieved.
Closing date for submissions: Thursday, 15 October 2015
The review of small amount credit contract (SACC) laws and related provisions in the National Consumer Credit Protection Act 2009 was established on 7 August 2015 to consider the laws applying to SACCs and consumer leases which are comparable to SACCs.
The independent panel is undertaking a period of consultation to seek views on the effectiveness of the laws relating to SACCs and whether a SACC database should be established. The panel are also calling for submissions on whether the provisions that apply to SACCs should be extended to consumer leases that are comparable to SACCs and, if so, how this would be achieved.
‘In Search Of …. Unquestionably Strong’ was the title of a speech given by APRA Chairman Wayne Byres. It is he highlights that there is an ongoing journey towards building greater capital ratios for the banks.
He makes two points of note. First banks around the world are on the same journey, so it must continue, and second, what ‘unquestionably strong’ meant precisely was largely left for APRA to determine. Its not a matter of mechanically moving in step with international benchmarks to maintain top quartile position.
He went ahead to reinforce the point that top quartile positioning is just one means of looking at the issue, and certainly not the only one to use; highlighted that there are many unknowns about the way capital adequacy will be measured in future, so it is not the end of the story; and that capital is just one measure of the strength of an ADI, and ideally we should think about ‘unquestionably strong’ with a broader perspective.
Using the data from the quarterly performance statistics he compared the capital ratios again CET1 and other measures. We have highlighted the fact that the ratio of loans to shareholder capital has not improved and concluded “We also see the capital adequacy ratio and tier 1 ratios rising. However, the ratio of loans to shareholder equity is just 4.7% now. This should rise a bit in the next quarter reflecting recent capital raisings, but this ratio is LOWER than in 2009. This is a reflection of the greater proportion of home lending, and the more generous risk weightings which are applied under APRA’s regulatory framework. It also shows how leveraged the majors are, and that the bulk of the risk in the system sits with borrowers, including mortgage holders. No surprise then that capital ratios are being tweaked by the regulator, better late then never”.
He concluded that APRA was still thinking about how to define ‘unquestionably strong’ and the role of top quartile positioning and made five closing points.
we have a soundly capitalised banking system overall in Australia;
with the aid of recent capital raisings, the initial 70 basis point CET1 gap to the top quartile that we identified is likely to have been substantially closed;
higher capital ratios are likely to be needed if current relative positioning is to be retained and enhanced, particularly if measures beyond CET1 are examined;
by quickly moving on the FSI recommendation regarding mortgage risk weights, APRA has created time to consider international developments emerging over the next year or so; and
given where we are today, APRA and the banking industry have time to manage any transition to higher capital requirements in an orderly fashion.
We would observe that the first two statements seem contradictory – if we are so well capitalised, why the lift in capital by 70 basis points? Why also are regulators all round the world desperately lifting ratio? The short answer is because they let the ratios get too lean and mean – as demonstrated by the GFC. This has to be addressed.
So, in short, the journey lays ahead. Then of course Basel IV is just round the corner. Australian banks are likely to find the costs of doing business will continue to rise. with consequences for loan pricing, loan availability and bank profitability.
Latest data from the DFA surveys which is going into the forthcoming edition of the Property Imperative, shows that the era of very large mortgage discounts is passing. The average discount has now fallen from above 100 basis points to around 60 basis points and it will continue to fall further. This means a windfall for lenders who can pocket the extra margin, or use it to attract owner occupied new business.
The range of discounts between the upper and lower bounds is reducing, with the lowest bounds around 20 basis points.
The most insightful data is the split by loan type. Loans for investment loans (both new and refinanced) are much reduced, with the average a little above 20 basis points – some lenders offer no discount at all now. On the other hand, owner occupied borrowers with new or refinanced loans can obtain a larger cut in rates. This reflects the new competitive landscape, where lenders are seeking to swing business away from the investment sector to owner occupied lending.
Data have been provided for a total of 221 banks, comprising 100 large internationally active banks (“Group 1 banks”, defined as internationally active banks that have Tier 1 capital of more than €3 billion) and 121 Group 2 banks (ie representative of all other banks).
The results of the monitoring exercise assume that the final Basel III package is fully in force, based on data as of 31 December 2014. That is, they do not take account of the transitional arrangements set out in the Basel III framework, such as the gradual phase-in of deductions from regulatory capital. No assumptions were made about bank profitability or behavioural responses, such as changes in bank capital or balance sheet composition. For that reason, the results of the study are not comparable to industry estimates.
Data as of 31 December 2014 show that all large internationally active banks meet the Basel III risk-based capital minimum requirements as well as the Common Equity Tier 1 (CET1) target level of 7.0% (plus the surcharges on global systemically important banks – G-SIBs – as applicable). Between 30 June and 31 December 2014, Group 1 banks reduced their capital shortfalls relative to the higher Tier 1 and total capital target levels; the additional Tier 1 capital shortfall has decreased from €18.6 billion to €6.5 billion and the Tier 2 capital shortfall has decreased from €78.6 billion to €40.6 billion. As a point of reference, the sum of after-tax profits prior to distributions across the same sample of Group 1 banks for the six-month period ending 31 December 2014 was €228.1 billion.
Under the same assumptions, there is no capital shortfall for Group 2 banks included in the sample for the CET1 minimum of 4.5%. For a CET1 target level of 7.0%, the shortfall narrowed from €1.8 billion to €1.5 billion since the previous period.
The average CET1 capital ratios under the Basel III framework across the same sample of banks are 11.1% for Group 1 banks and 12.3% for Group 2 banks.
Basel III’s Liquidity Coverage Ratio (LCR) came into effect on 1 January 2015. The minimum requirement is set initially at 60% and will then rise in equal annual steps to reach 100% in 2019. The weighted average LCR for the Group 1 bank sample was 125% on 30 June 2014, up from 121% six months earlier. For Group 2 banks, the weighted average LCR was 144%, up from 140% six months earlier. For banks in the sample, 85% reported an LCR that met or exceeded 100%, while 98% reported an LCR at or above 60%.
Basel III also includes a longer-term structural liquidity standard – the Net Stable Funding Ratio (NSFR) – which was finalised by the Basel Committee in October 2014. The weighted average NSFR for the Group 1 bank sample was 111% while for Group 2 banks the average NSFR was 114%. As of December 2014, 75% of the Group 1 banks and 85% of the Group 2 banks in the NSFR sample reported a ratio that met or exceeded 100%, while 92% of the Group 1 banks and 93% of the Group 2 banks reported an NSFR at or above 90%.
Lending money is a risky business. Since 2010, Bank of England figures reveal that lenders have written off an average of £13.2 billion a year in bad loans. You can never be 100% sure that you will ever get your money back.
One way of mitigating that risk is to know as much as possible about the person you are lending to. Indeed, some financial managers reportedly are now considering the use of personality tests to assess the suitability of borrowers seeking loans or credit agreements.
A new model developed by the University of Edinburgh’s Business School, for example, asks borrowers questions designed to reveal their trustworthiness. But could such tests, already used in various forms by some businesses to assess the suitability of potential employees, really work for lenders?
Predicting the future
The conventional way to assess the likelihood that someone might default is to look at their income and expenditure, their assets and their commitments, and make predictions on the basis of their financial circumstances. We also know that a person’s “credit history” is important – it is useful to know if a person has defaulted on loans before, or has other credit problems in their past.
This is all psychologically valid. It’s a well-known principle that the best predictor of future behaviour is past behaviour. But how do you make predictions where someone has little or no credit history?
This is where psychological tests could come in, and there is some superficial attractiveness here. If – and the word “if” is important – a person’s likelihood to default on a loan was related to their “personality”, and if (again) that was a measurable trait, and if (yet again) that trait could be measured in a way that was impervious to fraud or manipulation, and if – finally – such a questionnaire was asking questions that were something other than the obvious (or the spurious), then they could indeed be a useful tool.
Gaming the system
But there are problems. We learned recently that psychological science is good, but it’s a long way from infallible. In an attempt to replicate key psychological experiments, scientists found that they could substantiate the findings in only about half the studies examined. That may not mean we should lose faith in all psychologists, but it does mean that we should be a little sceptical when we’re told that a particular set of questions can predict loan defaulters.
Indeed, looking at the reported questionnaires, there seem to be a curious mix of questions, including: “I believe others try to do the right thing”, “I believe in human goodness” and “I pay attention to small details”. There may well be links between people’s typical responses to these questions and financial soundness, but the evidence would have to be convincing.
It’s much more likely that, if people want a loan, they will try and game the system. There is a strong chance they would give the answers that they think reflect a better credit trustworthiness: “I definitely pay attention to financial details. I am perhaps, if anything, too cautious.” As opposed to: “Oh, I don’t care, just give me the cash.” Any psychological assessment scheme would have to be robust to such game-playing, perhaps by asking more opaque questions.
Real data
But there’s a more insidious problem. According to the proponents of this approach, the idea is to protect a lender’s assets by assessing “how trustworthy, reliable, emotionally stable and conscientious a customer might be”. First, there is the very real difficulty of assessing these things, as pointed out by, among others, James Daley, of the consumer group Fairer Finance: “If banks think they can psychologically screen bad debt risks, they are deluding themselves.” But, more than this, very many trustworthy, reliable, emotionally stable and conscientious customers find themselves in financial difficulties, often as a result of economic forces entirely outside their control.
Past behaviour is the best predictor of future behaviour. Where there is very little data to go on, it’s then usually the case that people’s behaviour is best explained by looking at the circumstances of their lives. Doing this through personality tests, however, is clearly very tricky.
I am a professional psychologist, and proud to be one. I believe that my profession has much to offer, in the world of mental health and even in the world of politics.
But I also believe that very little of the potential of psychological science is revealed by “personality tests” that purport to address problems that, in truth, are better addressed through other means.
Author: Peter Kinderman, Professor of Clinical Psychology at University of Liverpool
The RBA minutes for the September “no change” decision do not add much to the sum of human knowledge other than they do believe momentum in investment housing may be slowing following the regulatory interventions.
Members noted that the key news internationally over the past month had been developments in the Asian region. The weakening in Chinese economic activity combined with developments in Chinese financial markets had led to sharp declines in global equity prices. So far, this volatility had not impaired the functioning of other financial markets and funding remained readily available to creditworthy borrowers. Moreover, several recent policy measures designed to support activity in China had not yet had their full effect. Economic conditions in the United States and euro area had continued to improve, monetary policies globally remained very stimulatory and lower oil prices would support economic activity in most of Australia’s trading partners. Overall, international economic developments had increased the downside risks to the outlook, but it was too early to assess the extent to which this would materially alter the forecast for GDP growth in Australia’s trading partners to be around average over the next couple of years.
Domestically, the national accounts were expected to show that output growth had been weak in the June quarter, following a strong outcome in the March quarter partly as a result of temporarily lower resource exports. Over the past year, resource exports had grown strongly and further growth was in prospect as the production of liquefied natural gas ramped up. The depreciation of the Australian dollar in response to the significant declines in key commodity prices was also expected to support growth, particularly through a larger contribution from net service exports.
Recent data on investment intentions suggested that mining investment would continue to decline and non-mining business investment would remain subdued in the near term, despite survey measures of aggregate business conditions being above average. However, non-mining business investment was still expected to pick-up over time as a result of the depreciation of the exchange rate over the past year and a further gradual rise in household expenditure.
Members noted that very low interest rates would continue to support growth in dwelling investment and household consumption. There were indications that the measures implemented by APRA had slowed the growth in lending for investment housing. Dwelling prices continued to rise strongly in Sydney, though trends had been more varied across other cities. The Bank was continuing to work with other regulators to assess and contain risks that may arise from the housing market. Prices in most other asset markets had been supported by lower long-term interest rates, while equity prices had moved lower and been more volatile recently, in parallel with developments in global markets.
Although the demand for labour had improved, particularly in service sectors, members noted that spare capacity remained and wage pressures continued to be weak. As a result, domestic cost pressures were likely to remain well contained and offset the expected rise in the prices of tradable items over the next couple of years. Inflation was forecast to remain consistent with the target over the next one to two years.
Given these considerations, the Board judged that it was appropriate to leave the cash rate unchanged. Information about economic and financial conditions would continue to inform the Board’s assessment of the outlook and whether the current stance of policy remained appropriate to foster sustainable growth and inflation consistent with the target.
Australian Households have some of the highest debt service ratios (DSRs) in the world according to a new database from the Bank for International Settlements. In this post we overview the BIS analysis and discuss some of the results. They confirm earlier analysis that households here are highly leveraged and so at risk should interest rates rise, especially when incomes are static or falling in real terms.
We have charted the raw outputs, for the main countries, and focused on households. If we look at the relative position of Australia, UK, Canada and USA, Australia has a higher DSR, not least because we have so far not experienced a significant drop in house prices, and mortgage lending is very high. This is consistent with previous analysis and is also the recommended measure for macroprudential purposes.
Looking more broadly at the 17 countries showing similar data, we sit fourth behind Netherlands, Sweden and Denmark. Note also the significant gap between these four and the rest of the set.
By way of background, DSRs provide important information about the interactions between debt and the real economy, as they measure the amount of income used for interest payments and amortisations. Given this pivotal role, the BIS has started to produce and release aggregate DSRs for the total private non-financial sector for 32 countries from 1999 onwards. For the majority of countries, DSRs for the household and the non-financial corporate sectors are also available.
DSR is important, as it captures the share of income used for interest payments and amortisations. These debt-related flows are a direct result of previous borrowing decisions and often move slowly as they depend on the duration and other terms of credit contracts. They have a direct impact on borrowers’ budget constraints and thus affect spending. Despite this, in Australia there is no comprehensive reporting, just gross household debt and household repayments.
Since the DSR captures the link between debt-related payments and spending, it is a crucial variable for understanding the interactions between debt and the real economy. For instance, during financial booms, increases in asset prices boost the value of collateral, making borrowing easier. But more debt means higher debt service ratios, especially if interest rates rise. This constrains spending, which offsets the boost from new lending, and the boom runs out of steam at some point. After a financial bust, it takes time for debt service ratios, and thus spending, to normalise even if interest rates fall, as principal still needs to be paid down. In fact, the evolution of debt service burdens can explain the dynamics of US spending in the aftermath of the Great Financial Crisis fairly well. In addition, DSRs are also highly reliable early warning indicators of systemic banking crises.
BIS has developed a methodology to enable comparisons to be made across countries. The DSR is defined as the ratio of interest payments plus amortisations to income. As such, the DSR provides a flow-to-flow comparison – the flow of debt service payments divided by the flow of income.
At the individual level, it is straightforward to determine the DSR. Households and firms know the amount of interest they pay on all their outstanding debts, how much debt they have to amortise per period and how much income they earn. But even so, difficulties can arise. Many contracts can be rolled over so that the effective period for repaying a particular loan can be much longer than the contractual maturity of the specific contract. Equally, some contracts allow for early repayments so that households or firms can amortise ahead of schedule. Given this, deriving aggregate DSRs from individual-level data does not necessarily lead to good estimates. And such data are rarely comprehensive, if available at all. For this reason, BIS derive aggregate DSRs from aggregate data directly.
While interest payments and income are recorded in the national accounts, amortisation data are generally not available and hence present the main difficulty in deriving aggregate DSRs. To overcome this problem, BIS follow an approach used by the Federal Reserve Board to construct debt service ratios for the household sector which measures amortisations indirectly. It starts with the basic assumption that, for a given lending rate, debt service costs – interest payments and amortisations – on the aggregate debt stock are repaid in equal portions over the maturity of the loan (instalment loans). The justification for this assumption is that the differences between the repayment structures of individual loans will tend to cancel out in the aggregate. They also make a range of assumptions about average loan durations. You can read about the full methodology here.
The introduction of International Financial Reporting Standard (IFRS) 9 will mark a considerable change in the way banks account for credit losses. IFRS 9 requires banks to switch to recognising and providing for expected credit losses (ECL) on loans, rather than the current practice under IAS 39 of providing only when losses are incurred. It will likely dent bank capital significantly and probably add volatility to earnings and regulatory capital ratios . However, it is too early to estimate the full impact that IFRS 9 introduction will have on individual banks or for the industry as a whole.
says Fitch Ratings.
IFRS 9 comes into effect in January 2018 and, as well as introducing ECL provisions, will change the way banks account for a wide range of financial assets.
Disclosure about the process and assumptions made for ECL calculations will be paramount for investors’ understanding of a bank’s financial position. A loan’s ECL will be calculated differently depending on a bank’s risk assessment of the loan during its life and will vary among banks. Preparation for applying the standard requires the development of complex models and data collection so that the final loan numbers reported on banks’ balance sheets under IFRS 9 will be subjective. Reporting of loans across banks will be more inconsistent than is currently the case.
There is a three-stage approach to ECL calculations under IFRS 9. The least predictable is the second stage and we think this could result in substantial additional impairment charges and high volatility at some banks. The second stage will apply to loans that experience a ‘significant increase’ in credit risk and ECL is then calculated on a lifetime rather than a 12-month basis. Banks are working through numerous scenarios to establish a framework for identifying when a ‘significant increase’ (as they define it) has occurred. They then need to derive lifetime losses prior to impairment, including assumptions for example on revolving loans or those with no fixed maturity, such as overdrafts and credit cards.
Banks are required to determine whether there has been a ‘significant increase’ in credit risk on any loan that is not considered low risk when collateral is excluded. This could result in a surge in impairment charges on long-term secured lending, such as retail mortgage books because historic data provided to Fitch by many of the banks we rate shows that most mid- to long-term loans that experience repayment problems do not default in Year 1. Volatility in transferring between 12-month and lifetime losses will work both ways because a loan can also transfer back into stage one, which would trigger a provision reversal.
Loans in stage one (when a loan is first made or acquired, remains low risk or has not seen a significant increase in credit risk) will trigger a capital hit when IFRS 9 is first applied because the standard requires 12-month ECL to be deducted for all loans. The third stage captures loans considered to be credit-impaired, which banks are already reserving so we would not expect any notable impact from the transition to IFRS 9 from these loans. On an ongoing basis, loan loss provisions are likely to be higher than in the past because ECL provisions will be a function of loan growth rather than incurred impairment; this will be especially true for banks experiencing rapid loan growth.
It is unclear whether regulatory capital calculations or ratio expectations will be adjusted to allow for the more conservative loan reporting under IFRS 9. The 12-month ECL concept is a familiar one for banks applying internal risk-based models to calculate risk-weighted assets for regulatory reporting. However, there are important differences, for example for regulatory 12-month ECL, the 12-month PD is multiplied by 12-month LGD but IFRS 9 requires lifetime LGD.
The ABS released their finance statistics to end July today. Investment housing flows made up 38.2% of all new fixed commercial lending in the month, and 29% of all new commercial lending. Overall lending for housing was more than 44% of all new bank lending in the month. Investment lending remains strong, and after recent bank’s loan reclassification, was higher than previously reported. The tightening of lending criteria for investment loans was yet to work through into meaningful outcomes.
Secured lending for owner occupation, including refinance was $18.86 bn (up from $18.71 bn last month) . Owner occupied was $12.6bn (up from $12.5 bn in June) and refinancing was $6.20bn, (up from 6.15 last month).
Investment housing was $13.72 bn, (up from $13.69 bn last month), and other commercial lending was $22.22 bn, (down from $22.26 bn last month). Personal finance was $7.48 bn (down from $7.51 bn in June).
The total value of owner occupied housing commitments excluding alterations and additions rose 0.8% in trend terms, and the seasonally adjusted series rose 2.2%.
The trend series for the value of total personal finance commitments fell 0.4%. Revolving credit commitments fell 1.0% and fixed lending commitments fell 0.1%. The seasonally adjusted series for the value of total personal finance commitments fell 2.6%. Fixed lending commitments fell 5.8%, while revolving credit commitments rose 2.6%.
The trend series for the value of total commercial finance commitments fell 1.2%. Revolving credit commitments fell 1.7% and fixed lending commitments fell 1.1%. The seasonally adjusted series for the value of total commercial finance commitments fell 2.7%. Revolving credit commitments fell 13.0%, while fixed lending commitments rose 0.9%.
The trend series for the value of total lease finance commitments fell 0.1% in July 2015 and the seasonally adjusted series rose 60.2%, following a rise of 2.8% in June 2015.
