Australia’s total private credit returns to moderate growth in July

A soft rebound in Australia’s business sector resulted in total private credit to return to moderate growth in July. In recent months, deceleration has been recorded in Australia’s business sector. Business credit in the nation recovered in July from an unexpected decline in June. It returned to moderate growth.

Annual growth is at a reasonable level, in line with upbeat surveyed business sentiment, with the current slowdown in new loans to businesses. This is a dull development as non-mining investment has been sluggish in recent years, noted ANZ in a research report.

Meanwhile, housing credit registered additional growth in July. It rose 0.5 percent, thanks to owner-occupiers. Following a slowdown in response to regulators’ intervention last year to ease investor borrowing, investor credit has risen at a slightly more rapid rate in recent months.

Given the recent indications of a rebound in housing activity, with auction clearance rates trending up throughout the major cities and daily house prices picking up, credit growth is likely to rise a bit more in future, according to ANZ.

“We think these signs may concern the RBA given that it believed “the likelihood of lower interest rates exacerbating risks in the housing market has diminished” when it cut rates in August”, added ANZ.