Australia's weaker housing investor credit demand largely offset by owner-occupiers

Demand for finance from housing investors slowed abruptly in the middle of the year: in July and August the average monthly annualised growth rate dropped to 8.1% from 11% in the first half of the year. But demand from owner-occupiers increased to 7.2% from 5.1%, and given that the stock of loans to owner-occupiers is 1.6 times that to housing investors, overall growth in housing finance has in fact picked up a little. That said, not too much should be made of the split of lending to owner-occupiers and investors, which even the RBA judges to be "of questionable quality at present" - the key point is that to date lending to the sector is holding up very well; indeed, it appears to be accelerating still. 

The most volatile component of the credit data, lending to businesses, is expected to have been a bit weaker than in July and August, but at 0.4% mom, 5.1% yoy, it is still consistent with strengthening momentum in investment outside of the mining sector. Overall private sector lending is therefore expected to have slowed only fractionally in September to 0.5% mom from 0.6%, or a healthy clip of 6.2% yoy from 6.3%.