Powered by MOMENTUM MEDIA
subscribe to our newsletter

Low rates drive private credit growth

Credit to the private sector has gained momentum as households and businesses respond to lower interest rates, according to a report by Westpac.

The results of the report showed annual credit growth at 6.2 per cent in March, increasing from 4.4 per cent a year ago.

Housing saw growth of 7.3 per cent over the past year, up from 5.9 per cent, while for business annual growth rose to 5.3 per cent, up from 2.7 per cent a year earlier.

In March alone, total credit expanded by 0.5 per cent – matching the February outcome and in line with the average of the previous six months.

“While the headline held at [a] 0.5 per cent gain in the month, the detail reveals a softer tone for business, with a rise of only 0.2 per cent,” the report said.

Advertisement
Advertisement

“That is a material down-step from 0.5 per cent per month on average over the previous half year.

“The softer business result was offset by a rounding up of housing, from 0.55 per cent to 0.62 per cent, and the first positive read on personal since October (+0.2 per cent after a -0.3 per cent).”

Looking at the housing market, credit increased by 10.4 per cent over the year, up from 7.7 per cent in March 2014, according to the report.

The March figure was 0.9 per cent, up from 0.8 per cent average over the past half year.

“Despite this, three-month annualised growth in investor credit has slowed a little to 10 per cent from a November peak of 10.8 per cent,” the report noted.

PROMOTED CONTENT


“This is consistent with housing finance, which lost momentum at the turn of the year.

“For owner-occupiers, the improvement in annual credit growth has been relatively modest, strengthening to 5.8 per cent currently, up from 5.0 per cent a year ago.”

The report also noted that the developments over the past year and a half, including the RBA’s decision to lower the cash rate in February, provides evidence that monetary policy continues to be effective in Australia, especially in terms of the housing market.

“We expect housing finance and housing credit growth to improve modestly in response to lower rates,” the report concluded.

 

Low rates drive private credit growth
mortgagebusiness

Latest News

The ASIC commissioner has revealed that he was unaware of the government’s proposal to scrap responsible lending laws until it made the a...

The neo-lender has announced that its warehouse loan funding facility has been upsized on the back of growth of its loan originations. ...

Illion’s bank statements and data provider and its credit reporting company have been made accredited data recipients under the Consumer D...

FROM THE WEB

Join a group of highly informed brokers.

Broker Pulse, a community-driven knowledge base of lender performance Reveal exactly which lenders are making life easiest for brokers and their clients by taking this monthly survey and joining a group of highly informed brokers who leverage these insights every month.

JOIN NOW
podcast

LATEST PODCAST: Court cases and penalties

Do you expect to see strong uptake of the HomeBuilder scheme?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.