Credit grew by 5.7 per cent in the year to October, up from 3.4 per cent a year earlier.
That is the strongest annual result since February 2009, at the height of the GFC, according to Westpac senior economist Andrew Hanlan.
“In October, credit increased by a surprisingly strong 0.6 per cent, including a 0.7 per cent rise in credit to business,” Mr Hanlan said.
“That is the largest monthly increase in six years, since September 2008, with the exception of June this year, up 0.7 per cent on a 1.0 per cent jump in business, which was inflated by a one-off bridging finance deal,” he said.
Housing credit grew by 7.0 per cent over the past year, up a full 2.0 percentage points on a year ago.
For investors, the figures are 9.9 per cent up from 6.3 per cent, while for owner-occupiers annual growth is a more modest 5.6 per cent, up from 4.4 per cent a year ago.
Over the past year, business credit expanded by 4.3 per cent, a marked improvement on a 1.3 per cent rise in the year prior.
In October, housing credit grew by 0.64 per cent, up fractionally on the monthly average for the year to date of 0.56 per cent.
Three-month annualised growth was 7.5 per cent through July to October, up from 7.0 per cent in recent months.
For investors, three month annualised growth is 10.9 per cent, while for owner-occupiers the figure is 6.0 per cent.
Business credit has turned the corner. An upswing is underway, which is likely to gradually gain momentum in 2015 as investment spending by the non-mining sectors expands, against the backdrop of improving international conditions, strengthening household demand and a sustained period of low interest rates.
“In October, business credit surprised to the high side, increasing by 0.7 per cent,” Mr Hanlan said.
“That comes on the back of a 0.5 per cent rise in September,” he said.
“However, new lending to business, commercial finance, having trended sharply higher from the start of 2013, eased back over August and September.
“This points to the risk of a near-term soft spot, which we expect will prove to be short lived.”