Housing drives new lending as borrowers ditch credit

Aggregate data from the nation’s top financial regulator shows how Australia’s latest housing bump is the only thing supporting borrowing.

The data year ending May shows housing lending is up 4.8 per cent keeping total credit growth to just 1.9 per cent.

Financial aggregate data from the nation’s monetary regulator reveals all lending categories grew between April and May, up 0.4 per cent overall.

The data, published by the Reserve Bank of Australia, reveals the strength of housing market lending, which is driving new credit growth.

House lending was the strongest performer in the seasonally adjusted data, which increased 0.6 per cent in the month.

In comparison personal and business lending grew 0.2 per cent respectively.

This comes after the data in April revealed business lending slid backwards, down 0.3 per cent for the month, while personal lending in that month stood still.

Compared to the 12 month data the housing lending is the only thing supporting overall credit growth.

The data year ending May shows housing lending is up 4.8 per cent keeping total credit growth to just 1.9 per cent.

Total lending to investors peaked in May at 675.2bn on a seasonally adjusted basis.

This was compared to the $1.24 trillion lent to owner occupiers across the housing market.

Over the 12 months to May personal lending collapsed 6.4 per cent.

Many Australians took the opportunities afforded by lockdowns and international border closures last year to pay down debts.

In May this year only $146.4bn was lent on credit, this was down from the 153.3bn outstanding in May last year.

Business lending also remains muted, down 2 per cent over the 12 months to May.

This is despite a series of stimulatory measures rolled out by the government aimed at driving borrowing to invest.

This comes after an already horror year in 2020, where personal lending slumped 10.3 per cent in the 12 months to May last year.

However, the data shows cash printing from the banks has seen a broad money increase over the 12 months to May by 6.8 per cent.

Broad money in circulation in May 2021 stands at $2.478 trillion.

This comes after a 9.3 per cent growth in broad money in the 12 months to May 2020, supported by many of the measures rolled out early in the pandemic last year to counter the economic slump.