This article is from the Australian Property Journal archive
HOUSING credit growth has fallen to an all time low, rising 10.6% over the 12 months to May – the slowest growth since August 1991, according to the Reserve Bank.
According to the RBA, housing credit grew 0.6 % in May – slowing for the fourth consecutive month.
Of this, owner occupier credit growth slowed sharply to 0.5% in the month, whereas investor credit rose marginally to 0.8%.
Over the year, total private sector credit rose by 13.4% – the slowest annual growth since October 2005 when borrowing levels increased by 13.2%.
JPMorgan’s economist Helen Kevans said both housing and personal credit growth will probably remain subdued in coming months, in the wake of the RBA’s rate hikes in February and March, and the disproportionate rises in domestic banks’ standard variable mortgage rates.
“The marked slowdown in credit growth this year reaffirms our view that the RBA will leave interest rates unchanged in the foreseeable future. Our forecast calls for the RBA to leave interest rates steady at 7.25% for the remainder of the year.
“There is building evidence of a loss of momentum in the domestic economy, and a “significant” easing in domestic demand, if sustained, should help curb inflation pressures,” she added.
Kevans said a slew of domestic data this week, including retail sales and building approvals, should confirm that domestic demand is easing, meaning that RBA officials probably will look through elevated inflation readings in coming quarters.
Australian Property Journal
