No credit growth in February

Ian Rogers
Financial aggregates for February 2009 confirm that owner-occupied lending remains the only growth sector of the credit market.

There was no growth in credit across the economy that month, the Reserve Bank of Australia's monthly data show. The 12-month growth rate in credit fell to 5.4 per cent in February, down from more than 15 per cent a year ago.

Lending to owner-occupiers increased by one per cent in February 2009 over January and growth in lending to this sector has stepped up since reaching a low point in August 2008. Lending for investment property loans dipped during the month, however.

Reduced interest rates, the temporary increase in the first home owners' grant and a modest improvement in the availability of loans from non-bank lenders, due to funding from the Australian Office of Financial Management, are all driving increased demand for home loans.

The weak global economic outlook, including regular talk of a recession in Australia, has dampened demand for credit more generally, while a degree of credit rationing is also a factor, at least in respect of business lending.