Commercial lending picks up
Futures markets have been assigning fully a 100 per cent chance of an interest rate cut by the second half of this calendar year.
Yet the ABS Lending Finance figures for November released today suggested that low rates and a lower dollar may just be gaining a little more traction, with total lending increasing to a new trend high of $74.7 billion.
In seasonally adjusted terms, total lending was some 20 per cent higher than one year ago.
Importantly, commercial lending picked up by a seasonally adjusted 1.1 per cent in the month, hinting at somewhat brighter news for Australian businesses, with business loans up by 23 per cent over the past year and revolving credit commitments up by 21 per cent.
Arguably some of this additional lending might have been sparked by macroprudential measures taken to slow investment property loans.
If that is truly the case, then it was a kick up the backside that Australian banks and lenders surely needed. The alternative narrative may simply be that the lower dollar is gradually encouraging competitiveness and investment. Your call.
Lending to owner-occupiers for housing purchases and construction continues to rise very strongly at the national level, trending up by 24 per cent over the year to a new high of $22 billion, although lending for major renovation activity has remained resolutely in the (unrenovated) doghouse.
Meanwhile, personal finance lending continues to slide (except for cars!) to sit at 9 year lows, suggesting that consumers are behaving rather more cautiously.
Investor loans consolidate
I looked at the surprisingly strong November Housing Finance data last week here.
The Lending Finance release today provided more detail at the state level, and it revealed a moderate rebound in November investor lending in New South Wales ($4.8 billion), Victoria ($2.8 billion), Queensland ($1.6 billion), and South Australia ($0.4 billion).
Looked at in rolling annual original terms, the chart will now begin to show that cooling macroprudential measures initiated by the regulator APRA have tamed the investor beast.
The latest available figures - as well as initial forays back into the investor market by banks such as AMP and Suncorp - imply that monthly investor lending may begin to track at around $11 to $12 billion per month, well down from the all-time record $14.2 billion we saw in April 2015.
A cautionary word to be noted here is that in some markets the slowdown in investor lending has largely been matched with an increase in owner-occupier lending, suggesting that loan finance is seeking the path of least resistance.
To take the example of New South Wales, total November housing finance of $13.9 billion in original terms suggests that in aggregate lending has been fairly flat for the past five months, and is still up by 19 per cent from a year ago.
Thus while investor loans are down by about 12 per cent over the year, owner-occupier lending has gone berserk to be up by 48 per cent over the year.
It is far from such a buoyant picture everywhere, however. With asking rents having tanked, investor loans are decelerating at an alarming pace in the Northern Territory, and this time around there may be no China-led commodities boost to save the day.
As such, all key indicators are pointing to a significant and arguably overdue correction in the Darwin property market.