Australia RBA Private Sector Credit Growth Slows on Biz Credit

     SYDNEY (MNI) - Private-sector credit data for September published by the

Reserve Bank of Australia on Tuesday:

                            September        August     September        August

-------------------------------------------------------------------------------

                         % Change m/m  % Change m/m  % Change y/y  % Change y/y

Total Credit                     +0.3          +0.5          +5.4          +5.4

Housing                          +0.5          +0.5          +6.6          +6.6

-Owner-occupier Housing          +0.5          +0.6          +6.3          +6.3

-Investor Housing                +0.4          +0.5          +7.2          +7.3

Business                         +0.1          +0.4          +4.3          +4.4

Other Personal                    0.0          -0.2          -1.0          -1.1

     FACTORS: Total private-sector credit growth rose at a slower pace of 0.3%

m/m in September, matching a pace last seen in February this year. The easing in

the growth pace was largely due to a slowing in business credit, which rose just

0.1% m/m, the lowest rate since February. Housing credit maintained the recent

monthly growth pace of 0.5% but, compared with August, both investor and

owner-occupier mortgage growth rates slowed. The slowing in investor mortgage

growth could be due to the switch from investor to owner-occupier mortgages of

A$1.4 billion in September. Partly explaining the continued switch is the rise

in mortgage rates for investor loans in the past few months. Personal credit

growth remained a drag, flat m/m in September with y/y growth in decline for the

21st month in a row.

     TAKEAWAY: The data shows private sector credit growth has slowed from the

6%-plus y/y growth pace posted in 2016. The slowing in investor housing credit

growth is a welcome development but given the overall slowing in housing market

activity, financial regulators may be worried about pushing down too hard on

investor lending. There is a big pipeline of apartment construction where the

majority of buyers are investors and if access to bank loans for credit-worthy

lenders becomes an issue, they could switch to non-bank lenders which could be a

bigger risk for regulators to deal with. Currently non-bank lenders' activities

are not regulated by the Australian Prudential Regulation Authority.

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

[TOPICS: MTABLE]