The data from the ABS of lending finance for May 2016 shows an overall fall of 0.8% in borrowing flow of all types, or $885 million, compared with the previous month. Within this, there was a relative rise in the proportion of new loans for investment housing (16.% of all lending flows), whilst the relative proportion of lending to business, net of investment housing, fell, to 53.8% of all lending in the month, down from a maximum of 61% of all flows in Match 2015.
This is not a good outcome when lending to business can translate to productive growth, whilst lending for investment housing continues to stoke up home prices and bank balance sheets. No surprise the banks are cutting mortgage rates to try and attract more business, but at the expense of business lending.
The total value of owner occupied housing commitments excluding alterations and additions fell 0.6% in trend terms to $20.5 billion. Investment lending volumes, which are included in the business volumes, were similar to the previous month, showing a relative swing towards investment loans at $11.6 billion.
The trend series for the value of total personal finance commitments rose 0.9%, or $65 million to $7.3 billion. Revolving credit commitments rose 1.8% and fixed lending commitments rose 0.3%. The seasonally adjusted series for the value of total personal finance commitments fell 4.6%. Revolving credit commitments fell 7.8% and fixed lending commitments fell 2.3%. Households are borrowing more on personal credit, including making up the difference on deposits for housing, as lending criteria get tighter.
The trend series for the value of total commercial finance commitments fell 1.2% to $28.4 billion, net of investment housing. Revolving credit commitments and Fixed lending commitments both fell 1.2%. The seasonally adjusted series for the value of total commercial finance commitments fell 4.1%. Fixed lending commitments fell 4.4% and revolving credit commitments fell 3.2%.
The trend series for the value of total lease finance commitments fell 3.9% in May 2016 and the seasonally adjusted series fell 14.2%, following a fall of 0.6% in April 2016 to $517 million.
