Business lending strong
Credit growth juuust eked out a new post-financial crisis high at 9.1 per cent growth in June (May: 9.1 per cent), while broad money growth has already begun tits decline.
There tends to be a lag in these figures, but going forward credit growth is likely to lose momentum.
Owner-occupiers are now sitting on the sidelines, and credit growth to homebuyers is now in decline.
Investors are still borrowing, however, seeking a hedge against inflation, and being tempted back by the prospect of lower prices and a sharp increase in rents in many markets (see paywalled AFR piece here). .
Annual housing credit growth overall recorded its first year-on-year decline for this cycle in June.
In turn, the housing credit impulse continues to fade, and is likely to do so for at least the remainder of 2022.
Business credit growth has been very solid over the past few months, a timely boost from the Delta strain reopening, and hit 13.2 per cent year-on-year in June.
Some of the business credit growth reflects higher prices, but much of the boom has been in the industrial space.
With housing credit growth slowing and personal credit growth still in decline, business credit now accounts for 34 per cent of outstanding credit, the highest share since 2013.
The wrap
Overall, while investors are still active in the housing market, sales volumes are falling away sharply.
And with the Reserve Bank set to increase the cash rate target by (at least) 50 basis points next week, this can be expected to continue over the months ahead.
Looking further ahead some of wilder market expectations have now been tempered, with the 3-year bond yield now trading below 2¾ per cent, and futures markets winding back their expectations for the cash rate getting to above 3 per cent by next year.
