Lending markets soft in February but commercial finance outlook strong

Activity in all sectors of the lending market - housing, commercial and personal - was down in February.

According to the latest Australian Bureau of Statistics lending finance figures, the value of new housing finance was down one per cent in February, compared with the previous month (in seasonally adjusted terms).

The value of new commercial finance was also down one per cent over the same period and the value of new personal finance was down 0.2 per cent.

The only segment where was an increase in activity in February was lease finance, and that is a tiny market.

While commercial lending dipped in February, the market has momentum, having jumped 13.7 per cent in January. New commercial loans for February were worth A$43.5 billion - 9.6 per cent more than the same time last year.

The Reserve Bank reported that business credit balances grew by 5.6 per cent over the 12 months to February.

Veda's Business Credit Demand Index, which measures applications for business finance, shows a 7.8 per cent increase in business loan applications during the March quarter and a 2.2 per cent increase in asset finance applications.

Veda said the growth in business loan applications was the strongest since December 2013 and the increase in asset finance applications was the first since June 2013.

Offsetting these gains, applications for trade credit were down 2.6 per cent during the quarter.