Pete Wargent blogspot


'Must-read, must-follow, one of the best analysts in Australia' - Stephen Koukoulas, ex-Senior Economics Adviser to Prime Minister Gillard.

'One of Australia's brightest financial minds, must-follow for accurate & in-depth analysis' - David Scutt, Markets & Economics Editor, Sydney Morning Herald.

'I've been investing 40 years & still learn new concepts from Pete; one of the best commentators...and not just a theorist!' - Michael Yardney, Amazon #1 bestseller.

Friday, 11 August 2017

Lending to business awakens

Business lending bounces

Lending finance displayed some solid 'bouncebackability', jumping by +8.3 per cent to a 7-month high of $73.59 billion. 

The rebound was driven by a bolshie +13.7 per cent uplift in commercial finance, while lending for renovations also trended up to their highest level in 7 years in June, helping to push total owner-occupier lending higher. 

Commercial lending has now picked up positively, up by nearly +30 per cent from a year earlier.

No stress?

Reserve Bank Governor Lowe today pointed the finger at a recent inequality "scare campaign" noting that fewer households are experiencing financial stress than 15 years ago.

Interestingly enough, despite a small uptick in June, personal finance commitments are still plumbing the depths at levels not seen since a decade and a half ago - even in nominal terms - confirming that consumers have clearly been winding down non-housing loan debt in the prevailing low interest rate environment. 

There are a couple of exceptions to this general rule, being higher borrowing for new cars - which are considerably cheaper than they used to be - and for renovations, for which I blame The Block (or more realistically, record stamp duty levies which necessarily discourage housing market mobility). 

Investor loans divergence

Lending to property investors is no longer growing at a breakneck pace, and indeed as a share of housing loans is being pared back. 

Splitting out the value of investor loans by states shows a significant divergence, with New South Wales and Victoria still rising, but relatively subdued activity elsewhere. 

Arguably restrictions on investor loans have not impacted the hotter Sydney and Melbourne markets as much as they have elsewhere - the good old law of unintended consequences - though these trends could yet shift. 

In Darwin the annual value of investor loans continued to decline to the lowest level since 2006.

Indeed, there's a genuine emerging risk that the population of the Northern Territory could actually fall into decline at some point over the next couple of years, which could lead to some rather interesting housing market dynamics!

The Commonwealth Bank announced a range of reductions to its fixed rate mortgages this morning, both for owner occupiers and for investors.