The annual rate of housing credit growth has dropped to the lowest level since 2012, according to the latest statistics from the Reserve Bank of Australia.
The latest Financial Aggregates statistics from the Reserve Bank of Australia (RBA) has revealed that, in seasonally adjusted terms, housing credit grew 4.9 per cent in the year to November 2018, the slowest rate of annual growth reported in November since 2012, when housing credit increased by 4.6 per cent.
The rate of housing credit growth also slowed on a month-on-month basis, declining by 0.1 per cent from growth of 0.4 per cent in October 2018 to growth of 0.3 per cent in November.
The slowed month-on month growth was driven by subdued investor lending activity, with Australia’s total investor portfolio unchanged at $593.7 billion.
Conversely, the underlying owner-occupied lending portfolio increased by $4.6 billion, now totalling $1.208 trillion.
The RBA’s figures coincide with the releases of the Australian Prudential Regulation Authority’s (APRA) latest monthly banking statistics.
APRA’s data revealed that most of the owner-occupied credit growth generated by an individual lender in November 2018 was originated by the Commonwealth Bank of Australia (CBA), which increased it’s owner-occupied portfolio by $1.4 billion, followed by NAB ($1 billion), Westpac ($700 million), and ANZ ($300 million).
Subdued investor lending activity reported by the RBA was also reflected in APRA’s data, with ANZ and Westpac reporting declines in their investor loan book of $300 million and $100 million, respectively.
In contrast, the investor loan books of CBA and NAB thickened in the month ending 30 November 2019, with both banks reporting increases of $100 million.
According to Commonwealth Treasurer Josh Frydenberg, APRA’s “targeted and short-term interventions” have “helped change the housing dynamic from one of investor led growth to owner-occupied led growth”, noting the rise in first home buyer activity.
However, in light of the slowdown in housing credit growth, Mr Frydenberg has urged banks to re-stimulate the flow of credit in response to the removal of APRA’s caps on investor and interest-only loan growth.
“Now that APRA's interventions have been wound back it is vitally important that the banks continue to provide affordable and timely access to credit particularly as housing credit from banks has fallen to 4.4 per cent compared to its 10-year average of 8.1 per cent,” he said.
“The banks keeping open their loan books to borrowers will help maintain the strength of the Australian economy.”
Credit slowdown not confined to housing
The RBA’s statistics have also revealed that personal loan approvals weakened both on a month-on-month and an annual basis.
Personal loan approvals declined by 0.3 per cent in the month ending 30 November, mirroring the decline of the previous month, and slipped by 1.7 per cent annually, compared to a 1.2 per cent fall in the year prior.
However, the RBA reported that business loan growth remained stable, increasing by 0.5 per cent in November (mirroring 0.5 per cent growth in October), while annual business lending activity improved by 0.2 per cent on an annual basis, from 4.2 per cent growth in the year to November 2017 to 4.4 per cent in the 12 months ending 30 November 2018.
On the whole, total credit growth increased by 0.3 per cent in November, a 0.1 per cent drop from the previous month, and increased by 4.4 per cent in the year to 30 November 2018, a 0.8 per cent decline from the year prior.
Charbel Kadib is the news editor on the mortgages titles at Momentum Media.
Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.