Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Monday, 12 September 2016

Lending finance rebounds

Lending finance rebounds

The ABS Lending Finance figures reported that commercial finance rebounded 9 per cent higher in July in seasonally adjusted terms helping total lending to rebound by 4.4 per cent in the month. However, the smoother trend figures show that over the past year lending has softened considerably.

The trend figures show that the slowdown has largely been felt in the business sector.

Personal lending finance remains subdued with credit card balances at a 7-year low.

Mining lending evaporates

At the industry level it's not hard to see which sectors have been hit the hardest, with mining and associated industries accounting for the weakness. In fact, new lending to the mining sector has almost totally dried up (although struggling miners will look at other avenues to fund operations).

At the state level commercial finance has declined in each of the four largest states, in part due to reduced property investment activity.

Property investor loans

Last week the Housing Finance figures showed that property investor lending hit a 12-month high in July. 

The state level figures are not seasonally adjusted, however, and are therefore shown here in rolling annual terms - and total lending values continue to track lower than in the prior year.

In some parts of Sydney investor activity remains red hot - such as in the Eastern Suburbs where auction clearance rates exceeded 91 per cent at the weekend - but in aggregate the figures suggest that investors are losing purchasing power through 2016. 

Some states and territories are doing it tougher than others. The Northern Territory is still trying gamely to find a floor, with investor lending sinking back to 2006 levels. 

The wrap

Total lending finance has pulled back from near record highs to sit at a solid level. 

The only good thing to report for the mining sector is that new lending finance can't fall lower than zero.