In seasonally-adjusted figures, monthly housing credit growth was only 0.2% in January 2019, according to the latest data released by the Reserve Bank of Australia today.
That’s down from 0.3% in December, representing a continued slowdown since May 2017’s rise to 0.6% housing credit growth.
Annual housing credit growth fell down from 4.7% in December to 4.4% last month – the equal-lowest rate on record.
Aust Jan credit growth remained soft at +0.2%mom/+4.3%yoy. Biz +0.3%mom/5.2%yoy but total housing credit growth weakest on record at +0.2%mom/4.4%. Owner occs slowed to +0.3%mom/6.2%yoy, investor +0.1%mom/+1%yoy. Personal credit growth still negative. Credit tightening continues pic.twitter.com/cj05dCwGE7— Shane Oliver (@ShaneOliverAMP) February 28, 2019
The slower credit growth comes amid an environment of widespread falls in property prices, weaker demand and tighter lending standards.
Numerous analysts have warned that these tighter lending standards could continue to drive property prices lower and act as a drag on the economy.
Yesterday, a report from UBS warned that tight lending standards could lead to the RBA cutting the cash rate by 50 basis points by early 2020.
“We continue to expect credit tightening to see ongoing weakness in housing, leading to a negative wealth effect on consumption, resulting in below trend GDP growth, which sees the unemployment rate rise and the RBA cut rates in November and February,” UBS analysts said.
Westpac Senior Economist Andrew Hanlan said the tighter lending conditions were predominantly directed at investors.
“The upshot is a more marked slowing in investor credit growth,” Mr Hanlan said.
“For the three months to January, investor credit almost stalled, advancing by 0.7% annualised.”
Mr Hanlan said the slowdown in credit for owner-occupiers was more pronounced over the past year.
” The three-month annualised pace [of owner-occupier housing credit growth] is now 4.4%, moderating from 7.7% at the start of 2018 and down from a peak of 8.7% in mid-2017.”
While housing credit growth was extremely low at 0.2% over the month, personal credit (such as loans for buying cars or holidays) shrank by -0.6% – the biggest monthly slide since August 2011.
This extreme fall could be down to the emerging popularity of ‘buy now, pay later’ services like Afterpay and ZipMoney.
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