Lending accelerates but slows for homes
FINANCIAL institutions are issuing credit at their fastest pace for six months but credit to housing investors is growing at its slowest rate for two years.
Figures from the Reserve Bank of Australia showed that total credit rose by 0.6 per cent between June and July, the biggest monthly rise since January. But the 0.6 per cent rise in credit to housing investors, a particular focus for the RBA, was the smallest monthly gain since mid-2013, following June’s 1 per cent rise, which was the steepest since June 2007.
W ith fears growing a housing market bubble could threaten economic growth, the Australian Prudential Regulation Authority in December warned lenders not to expand their credit to the sector by more than 10 per cent annually.
More recently, APRA has flagged an increase in the amount of capital banks have to hold for their residential property lending.
Despite the slower rise in July, annual growth in this component of credit stayed above APRA’s red line, at 10.8 per cent over the year to July, albeit down from 11.1 per cent.
Meanwhile, HIA figures showed new home sales eased 0.4 per cent in July, after rising 0.5 per cent in June.