Australia’s private sector credit growth accelerates in March, business sector credit growth unlikely to sustain

Australia’s private sector credit growth accelerated sequentially in March. The total private sector credit rose 0.5 percent in the month, the most rapid monthly growth since July 2017. This is an improvement from February’s 0.4 percent growth. On a year-on-year basis, private sector credit growth improved to 5.1 percent from 4.9 percent recorded in the prior month. Underlying this improvement was a sharp rise in business credit growth, the pace of which is not expected to be sustained as it is inconsistent with the fairly low growth in business loan approvals, noted ANZ in a research report.

Housing sector credit rose 0.5 percent sequentially for the third straight month. This lowered the year-on-year rate to 6.1 percent in March from 6.2 percent, which is the slowest since April 2014. In the housing segment, owner-occupied credit growth decelerated to 0.6 percent sequentially from February’s 0.7 percent. Investor credit growth was stable at 0.2 percent sequentially but slowed to 2.5 percent year-on-year.

APRA’s recently announced removal of the 10 percent growth cap on investor loans does not necessarily foreshadow a revival in this segment, given that most banks had already fallen well below the growth cap and that the regulator is tightening a several other measures around lending at the same time as the cap is being lifted.

Business sector credit rebounded to 0.8 percent sequentially from 0.1 percent, the fastest rise since June 2017. On a year-on-year basis, business sector credit rose to 4.4 percent. On a sequential basis, personal credit dropped 0.1 percent after falling 0.2 percent in the prior month.

At 12:00 GMT the FxWirePro's Hourly Strength Index of Australian Dollar was neutral at -27.6884, while the FxWirePro's Hourly Strength Index of US Dollar was highly bullish at 148.702. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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