Few demand for loans apart from housing | Liverpool City Champion


Australia’s economy can grow at a solid pace with confidence at multi-year highs, but there is little sign that people are ready to take out a loan other than housing.

Australia’s booming real estate market has seen the amount of home loans in the economy rise to its highest level in over two years, but business credit remains at its lowest level in over two years. a decade.

“Besides housing, Australians are still reluctant to borrow,” said Craig James, chief economist at Commonwealth Securities.

Credit figures from the Reserve Bank of Australia show total home loans rose 0.5% in April, to an annual pace of 4.4%, the highest since January 2019.

Homeowner mortgages have risen 0.6 percent to 6.2 percent annually, as investors seem to finally rally after a notable absence.

Investor loans increased from 0.4% to 1.1% per annum, the highest rate since December 2018.

The RBA and other financial regulators are closely monitoring developments in the housing market to ensure lending standards do not deteriorate at a time of sharp price increases.

Overall, total credit in the economy increased 0.2% in April to 1.3%.

Demand for non-home personal loans remained stable in April, falling 7.8% during the year.

Credit to businesses fell another 0.3% to decline 3% per year, its lowest since September 2010.

RBA Governor Philp Lowe will likely refer to the housing market at his post-council meeting on Tuesday.

Otherwise, there is little doubt that the RBA will leave its policy streak unchanged at its monthly meeting, with the spot rate remaining at an all-time high of 0.1 percent.

Timo Henckel of the Australian National University expects the cash rate to remain unchanged for at least a year.

“The lockdown in Victoria serves as a powerful reminder that COVID-19 can affect the national economy in unexpected ways at any time, at least until a large portion of Australia’s population is vaccinated,” said Dr Henckel.

“Further fiscal and monetary stimulus are needed for the foreseeable future and large budget deficits and low interest rates are likely to persist for years to come.”

Dr Henckel chairs the so-called RBA parallel council of ANU, made up of academics and economists from the Crawford School of Public Policy.

That gives a 95 percent chance that the cash rate will remain unchanged at Tuesday’s board meeting and a 62 percent prediction that it will remain unchanged in 12 months.

The RBA does not plan to hike tariffs until 2024.

Dr Henckel notes that while the economic recovery accelerated, which saw the unemployment rate drop to 5.5 percent, annual inflation was only 1.1 percent and well below that RBA’s 2 to 3 percent target.

Australian Associated Press

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