Fresh research has revealed the level of business loan, trade credit and asset finance applications rose solidly in the March quarter, with growth in commercial mortgage applications surging by almost 26 per cent.
According to the quarterly Business Credit Demand Index by Equifax, overall business credit applications rose by an annual rate of 1.6 per cent in the March quarter, compared with the corresponding period last year.
The results reflected an increase of +3.4 per cent in business loan applications, and +1.8 per cent in asset finance applications, compared to the same period in 2016. However, the overall growth rate was tempered by a fall of -0.8 per cent in trade credit applications.
Growth in business loan applications was supported by a significant strengthening in commercial mortgage applications, which rose 25.7 per cent year-on-year.
Commenting on the findings, Neil Shilbury, general manager of commercial and property products at Equifax, said the moderate growth in the Index indicated a steady outlook for businesses.
“The rate of growth in the March quarter is reflective of Australia’s broader economic situation. While there are a number of factors supporting economic growth – stronger commodity prices off the back of fiscal improvement in China, and the completion of mining projects commenced during the resources boom which are now resulting in increased exports – the negative impact of falling mining investment still lingers,” Mr Shilbury said.
“Much of the growth seen in the March Index can be attributed to commercial mortgage demand. This activity is driven in large part by the fact that interest rates remain at record lows, encouraging the investment housing boom to continue, despite regulators’ attempts to cool the market,” he continued.
While growth in the number of applications for business credit eased in both the mining and non-mining jurisdictions in the March quarter, stronger conditions continue to be seen in the non-mining jurisdictions (+2.8 per cent) than in the mining jurisdictions (-1.0 per cent) of Queensland, Western Australia, and the Northern Territory.
However, Queensland is showing early signs of growth (+0.9 per cent), benefiting from broader economic activity, such as housing investment and tourism.
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