Credit growth slumps
Annual credit growth in Australia slumped to the lowest level since the global financial crisis at just 1.57 per cent in February.
Business credit growth actually turned negative year-on-year, for the first time in a decade.
It's true that buy now/pay later services and the government stimulus measures have warped these figures to some extent, but even so it's odd that the media is calling for tighter lending environment when lending has been so painfully constrained already.
Of course, it's not really about that, it's about controlling house prices, which in some markets, at least, have begun to rise strongly (though certainly not in all).
Annual housing credit growth has also been fairly modest, picking up to 3.81 per cent in February, which is the highest level since the 2019 election lead-up and ensuing banking Royal Commission crunch.
Although overall housing credit growth is modest - with only 14 per cent of loan values on interest-only these days and more people paying off debt - the acceleration will be enough to push housing prices higher as 2021 progresses.
But with credit growth at decade lows the calls for macroprudential are misplaced.
The idea that rising prices are due to a sudden relaxation of lending standards in Australia is easily debunked.
Check out what's happening in the United Kingdom (prices rose 9 per cent nationally last year), or the U.S. (the Case Shiller index is up by more than 11 per cent year-on-year, for the fastest growth since 2006), or New Zealand (where prices are expected to rise 25 per cent over the year),
The Aussie housing market will slow down later in the year anyway, with detached housing supply now at a record high, immigration at a record low, and the looming potential for a Labor election win to take the wind out of investors' sails, just as the conga line of first homebuyers is exhausted.
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