MNI ANALYSIS: Australia Aug Credit Growth Up On Business Loans

--M3 Growth Accelerates

By Sophia Rodrigues

     SYDNEY (MNI)  - Australia's total credit growth accelerated in August by

the fastest pace in five months due mainly to rise in business credit which

recorded the biggest monthly rise since June last year.

     Overall the data supports the Reserve Bank of Australia's central scenario

that the economy is continuing to grow at a pace that would lead to a gradual

fall in unemployment rate and a rise in inflation towards the mid-point of the

2% to 3% target band.

     Data published by the RBA Friday showed housing credit rose 0.5% m/m in

August, matching a pace last seen in March. The year-on-year growth was 4.5% in

August, slightly faster than 4.4% recorded in July.

     Business credit was the main contributor to the growth, rising 0.8% m/m --

the biggest increase since June last year.

     Housing credit growth rose 0.4% m/m, leading to a further slowing in y/y

growth to 5.4% in August versus 5.5% in July. 

     While investor mortgage growth rose at the same 0.1% m/m pace in both July

and August, owner-occupier mortgage rate slowed to 0.5% from 0.6%, and matched

the rate last seen in December 2016. The y/y owner-occupier mortgage rate slowed

to 7.5% and is well off the 8.1% growth seen in the early months of this year.

The slowing in the owner-occupier mortgage growth occurred despite A$1.1 billion

of mortgages transfer to this category from investor loans.

     The mortgage data shows the housing market continues to slow in line with

the RBA's expectation but there's also a risk that the pace of slowdown could

accelerate and hurt the economy's growth prospects. 

     Other personal credit continued with its recent soft trend, falling 0.2%

m/m and the y/y pace fell 1.4%, the same as July. 

     Meanwhile, the data also showed a sharp acceleration in money supply growth

in August, with M3 rising 0.7% m/m compared to flat outcome in July. The y/y

pace for both M3 and broad money rose 2.4% versus 1.9% in July.

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

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