Australia’s business credit falls in July, new business loan growth likely to remain soft

Australia’s business credit dropped 0.1 percent sequentially in July, consistent with market expectations. July’s decline follows the 0.2 percent fall recorded in June. The smaller fall in July was driven by a smaller decline in business credit. Still, it does not seem that the low has been reached for business credit and larger falls are likely going forward with new business loan growth expected to stay soft, said ANZ in a research report.

In spite of a large rise in housing finance in June, overall housing credit growth remained the same at 0.2 percent sequentially in July. Annual housing credit growth has now been at 3.1 percent year-on-year since January 2020. Nevertheless, this has been because of offsetting movements in owner-occupier and investor growth. With further declines in house prices expected as well as a deteriorating labor market, housing credit is expected to decelerate and turn negative by mid next year, stated ANZ.

The fall in personal credit accelerated in July and with a soft labor market and likely continued growth in Buy Now Pay Later, the fall is expected to continue in the next 12 months.