Credit demand negative for banks

Household wealth may be on the up thanks to the property market more than equities, but the household sector is thumbing banks on both sides of the balance sheet.

Households' demand for credit during the September 2019 quarter was negative for the first time since March quarter 1993, the Australian Bureau of Statistics said yesterday. Think the days of a tepid recovery from the brutal recession of the early 1990s as the comparator.

A more pronounced aversion to debt is the top theme of the Finance and Wealth variant of the Australian National Accounts.

Deposits from households as a source of funding for banks decreased to 57.7 per cent over the quarter, the lowest it has been since June quarter 2016, the ABS said, partly reflecting record low interest rates.

The value of long term loans to households by banks decreased A$8.1 billion over the September quarter, for the first time since December quarter 2014, "as households paid off debt this quarter," the ABS said.

Year to date growth in long term loan balances "has fallen to a new historic low of 2.9 per cent," the ABS said.

Household net worth increased 3 per cent to $318.0 billion in September quarter 2019. The value of residential land and dwellings increased 2.9 per cent.

The ABS said "this represents the first quarter of real holding gains on residential land and dwellings following six consecutive quarters of losses.