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Home lending activity slows but set to soar

by Charbel Kadib4 minute read

Housing growth has “reached its low”, with the interest rate environment and recent regulatory developments expected to trigger an uptick in demand. 

The Reserve Bank of Australia (RBA) has released its latest Financial Aggregates data, reporting housing credit growth of 0.2 per cent in August, down from 0.3 per cent growth in July.

Home lending growth also slowed in annual terms, down from 5.4 per cent growth in the 12 months to August 2018, to a new low of 3.1 per cent growth in the year ending August 2019.

The slowdown in housing credit growth was driven by a 0.1 per cent fall in investor lending, while owner-occupied credit growth dropped from 0.5 per cent in July to 0.3 per cent in August.

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However, according to ANZ Research, demand for housing credit is set to pick-up in response to recent cuts to the cash rate from the RBA and changes to mortgage lending guidance.

“It is likely that housing credit growth has reached its low,” the research group stated.

“The easing in regulatory conditions, as well as rate cuts (both actual and expected) are already seeing the housing market improve.

“The housing credit impulse has picked up over the past few months – although there was a slight dip in August.”

Further stimulus may be on the way, with the RBA expected to cut the cash rate for the third time in five months when its monetary policy board meets this afternoon. 

The RBA data also revealed that business lending growth remained stable at 0.2 per cent, while personal lending fell by 0.2 per cent for the second consecutive month. 

Total credit growth was stable at 0.2 per cent month-on-month but growth slowed in annual terms, from 4.5 per cent in the 12 months to August 2018 to 2.9 per cent in the 12 months to August 2019. 

[Related: Aussie backs Treasurer in fight for sober lending

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Charbel Kadib

Charbel Kadib

AUTHOR

Charbel Kadib is the news editor on The Adviser and Mortgage Business.

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