Australia: Softness in private credit continues – Westpac

Andrew Hanlan, analyst at Westpac, notes that Australia’s total credit grew by only 0.16% in April, the softest monthly result since the start of 2013.

Key Quotes

“Housing grew by 0.28% in the month, personal declined by 0.3% and business was flat. 
Annual credit growth slowed to 3.7%, the slowest pace since November 2013.”

“Credit growth has progressively slowed since expanding by 6.6% in 2015, with growth moderating to 5.6% in 2016, +4.8% in 2017 and +4.3% in 2018.”

“Key to this trend has been the housing sector. Housing credit growth has slowed over recent years: from 7.4% in 2015; 6.3% in both 2016 and 2017; to 4.7% in 2018. The latest annual reading is 3.9%, the weakest reading in the history of the series (dating back to the late 1970s.)”

“Looking ahead, the prospect for a stabilisation of the market has improved. Sentiment appears to have bounced following the May 18 Federal election, with the return of the Coalition government. The RBA is set to lower rates in June, the first cut since August 2016, and APRA is proposing to moderate the interest rate buffer test.”