Photo by Matthew Henry on Unsplash
Annual credit growth in Australia has hit a near-decade low, according to the latest Reserve Bank (RBA) data.
Lending to households and businesses grew by 2.3% in the year to November 2019, while it grew by 0.1% over the past month.
According to the RBA's data, that 2.3% growth rate is the smallest since April 2010 (2.2%), and should boost the chances of another RBA rate cut occurring early next year after last week's positive unemployment figures.
This is the 13th consecutive month that credit growth has fallen - a lack of credit growth essentially means people aren't taking out loans for houses.
Indeed, housing credit grew by just 0.2% for the month and 2.9% over the year.
House prices have surged recently, particularly in Sydney and Melbourne, pushing annual housing growth into the positives for the first time since April 2018, following solid declines from 2017's peak.
However housing credit is a function of both house prices and the volume of properties on the market and being sold.
This is why we're seeing these weak credit growth numbers.
Credit for purchases other than housing (personal credit) such as car loans or personal loans fell by 0.5% month-to-month and by a significant 4.9% year-on-year, while lending to businesses rose by 0.3% and 4.4% respectively.
Investor numbers fleeting
Much of the downturn in housing credit growth appears to be somewhat driven by investors.
In November 2018 investor credit growth was in excess of 1.1% annually, and even managed to hit more than 10% back in 2015.
But November 2019's annual investor credit growth figure was -0.3%, a negative number for the fourth time in the last six months.
The table below displays a selection of variable-rate investment home loans on offer, featuring a low-rate pick from each of the following three categories: the big four banks, the top 10 customer-owned banks, and the larger non-banks.
Lender | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Variable | More details | ||||||||||||
| AN EASY ONLINE APPLICATION | |||||||||||||
Yard Investment Loan (Principal and Interest) (LVR < 80%) | |||||||||||||
- Fast turnaround times, can meet 30-day settlement
- For purchase and refinance, min 20% deposit
- No ongoing or monthly fees, add offset for 0.10%
Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of June 25, 2022. View disclaimer.
Owner-occupied credit growth hit 0.4% monthly, which is the smallest figure since June, while its annual 4.7% growth is the lowest since February 2014.
| Monthly growth | Annual growth | |
| Owner-occupier loans | 0.4% | 4.7% |
| Investor loans | -0.1% | -0.3% |
With three interest rate cuts occurring in 2019, and at least one more expected to happen in 2020, interest rates are at record lows at the moment and don't look like changing anytime soon.
The table below displays a selection of variable-rate home loans on offer, featuring a low-rate pick from each of the following three categories: the big four banks, the top 10 customer-owned banks, and the larger non-banks.
Lender | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Variable | More details | ||||||||||||
| FEATUREDUNLIMITED REDRAWSSPECIAL OFFER | Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)
| ||||||||||||
Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)
| |||||||||||||
| Variable | More details | ||||||||||||
| FEATURED100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES | Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)
| ||||||||||||
Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)
| |||||||||||||
| Variable | More details | ||||||||||||
| FEATUREDZERO APPLICATION FEESFEE FREE OFFSET | Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)
| ||||||||||||
Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)
| |||||||||||||
| Variable | More details | ||||||||||||
| AN EASY DIGITAL APPLICATION | Neat Variable Home Loan (Principal and Interest) (LVR < 60%)
| ||||||||||||
Neat Variable Home Loan (Principal and Interest) (LVR < 60%)
| |||||||||||||
| Variable | More details | ||||||||||||
| NO APPLICATION FEES | Yard Home Loan (Principal and Interest) (LVR < 80%)
| ||||||||||||
Yard Home Loan (Principal and Interest) (LVR < 80%)
| |||||||||||||
| Variable | More details | ||||||||||||
| NO UPFRONT OR ONGOING FEES | Owner Occupier Accelerates - Evaporate (LVR 60%-70%) (Principal and Interest)
| ||||||||||||
Owner Occupier Accelerates - Evaporate (LVR 60%-70%) (Principal and Interest)
| |||||||||||||
| Variable | More details | ||||||||||||
| NO UPFRONT OR ONGOING FEES | Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 80%)
| ||||||||||||
Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 80%)
| |||||||||||||
| Variable | More details | ||||||||||||
| UNLIMITED EXTRA REPAYMENTS | |||||||||||||
Basic Home Loan (Principal and Interest) (LVR < 60%) | |||||||||||||
| Variable | More details | ||||||||||||
| EASY DIGITAL APPLICATION | |||||||||||||
Neat Variable Home Loan (Principal and Interest) (LVR 70%-80%) | |||||||||||||
| Variable | More details | ||||||||||||
| $0 APPLICATION FEE | |||||||||||||
Budget Home Loan (Principal and Interest) (LVR < 80%) | |||||||||||||
| Variable | More details | ||||||||||||
| 100% FULL OFFSET ACCOUNT | |||||||||||||
Offset Package Home Loan (Principal and Interest) (LVR < 60%) | |||||||||||||
| Variable | More details | ||||||||||||
| FEATUREDLIMITED TIME OFFER | Smart Booster Home Loan Discounted Variable - 1yr
| ||||||||||||
Smart Booster Home Loan Discounted Variable - 1yr
| |||||||||||||
- Fast turnaround times, can meet 30-day settlement
- For purchase and refinance, min 20% deposit
- No ongoing or monthly fees, add offset for 0.10%
Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of June 25, 2022. View disclaimer.
Disclaimers
The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.
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