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Thursday, 1 December 2016

Investor rebound continues

Investors return

Following on from what we have already seen reported elsewhere by the ABS and APRA, the Reserve Bank's Financial Aggregates for October showed investor credit growth on the march again. 

With interest rates having been cut a couple of times earlier in the year, investor credit rose by +5.3 per cent over the year. 

Owner-occupier housing credit was up by +7.1 per cent over the 12 months to October, with housing credit overall up by a steady +5.4 per cent. 

With personal and annual business credit growth sagging, total annual credit growth pulled back to +5.3 per cent.

Business & funding

Having recently tweaked term deposit rates northwards, banks achieved their desired effect with TDs growing by +9.9 per cent over the year to a record $552 billion, having previously been out of fashion for quite some time in the low interest rate environment.

Unfortunately, despite a better monthly result in October of +0.5 per cent, the steady recovery business credit growth seems to have lost its way, with annual growth pulling back to +4.3 per cent. 

Housing juggernaut

Commentators have been falling over themselves to call a housing market slowdown over the last five or six years.

But if there's been much of a genuine slowdown in lending you'd need a bloody good microscope to see it, with housing credit steaming well beyond $1.6 trillion and almost exactly doubling from $806 billion over the past decade. 

Total credit outstanding seared beyond $2.6 trillion, although personal credit has been declining, perhaps in part due to the increased use of lines of credit, mortgage offsets, and redraw facilities. 

As a result of the difficulty surrounding the categorisation of debt, over time the share of credit attributable to housing has probably picked up some of the declining share of business and personal credit, though it's impossible to say to what extent that's true. 

The wrap

A mixed result overall, with year-on-year weakness in business credit pulling down annual credit growth, but further signs of property investors returning to the fore. 

Housing credit continues to inexorable rise to beyond $1.6 trillion, while listing levels are well down from a year ago. 

As you were.