Household lending up 2.6% in February, smashing expectations

author-avatar By on April 09,2019
Household lending up 2.6% in February, smashing expectations

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The value of new lending commitments to households was up by 2.6% in February in seasonally adjusted figures, data from the Australian Bureau of Statistics (ABS) shows.

The rise in household lending follows a 2.3% fall in January.

According to ABS Chief Economist Bruce Hockman, household lending still remains subdued.

“Despite the rise in February, the longer term story is largely unchanged with new lending to households remaining subdued and well down on levels seen over the past five years,” Mr Hockman said.

“Lending for owner occupier dwellings in New South Wales is a good example of this broader story, with the series still down over 20% from the peak of lending in August 2017, even after recording an 8.2% monthly rise in lending commitments in February.”

At a national level, the value of lending for owner occupier dwellings rose 3.4% in February.

Lending for investment dwellings recorded a more modest rise of just 0.9%.

The number of loans to owner-occupier first home buyers was up by 1.8% which outpaced the rise in the number of loans made to owner-occupier non-first home buyers (1.6%).

Meanwhile, household personal finance lending, which includes car loans and personal loans, rose by 0.4% after a 1.2% increase in January.

“While this is the first back-to-back increase in lending for personal finance since late 2017, the components of this lending generally linked to household consumption remained relatively weak,” Mr Hockman said.

Westpac senior economist Matthew Hassan said the February update was firmer than expected.

“This was consistent with the improved tone from auction market activity and a slowing in price declines in recent months. Some of the effects of tightening credit conditions may also be dissipating,” Mr Hassan said.

“That said, the signs of improvement are still only tentative. The market may be starting to find a base in terms of finance activity but conditions remain weak overall.”

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Emma joined as a Finance Journalist in 2019. She is a journalist with more than five years experience across print, broadcast and digital media, with previous stints at Style Magazines, 4ZZZ radio, and as editor of The Real Estate Conversation. She's most passionate about improving the financial literacy of young women and millennials by writing about complex financial topics in a way that's easy for the average Joe (or Jill) to understand. When she's not writing about finance she's watching Greys Anatomy (again).


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