MNI ANALYSIS:Australia Mortgage Growth M/M Lowest Since Dec'12

--Investor Mortgage Growth M/M Falls Third Time In Data History

By Sophia Rodrigues

     SYDNEY (MNI)  - Australia's housing credit growth slowed in June to a rate

last seen in December 2012 as fall in housing prices and tightening in lending

standards continues to take its toll on credit growth.

     On the face value, the data is comforting to the Reserve Bank of Australia

because slowing in housing credit amid slow income growth means the build-up of

risk in household balance sheets is being contained. But a fall in housing

market activity would also have implications for the economy because it might

impact household spending, and also the general activity in the economy.

     Data published by the RBA Tuesday showed overall credit grew 0.3% m/m in

June matching MNI median forecast for a 0.3% rise. In y/y terms, total credit

slowed to +3.2%, the lowest rate this year.

     The fall was driven by a slowing in housing credit which offset a rise in

business loan growth.

     Housing credit rose 0.3% m/m in June, the lowest rate since December 2012.

The y/y growth rate slowed to 5.6%, a pace last seen in January 2014. The

slowing in housing credit growth was due to a fall in investor loan growth which

declined 0.1% m/m, the first fall since February 2009. In the history of the

data going back to 1990, this is only the third occasion when investor mortgage

growth has declined.

     On a y/y basis, investor mortgage growth slowed to a new record low of

1.6%, compared with 2.0% growth seen in May.

     Business credit rose 0.3% in June, rebounding from a flat outcome in May

but the y/y pace slowed to 3.2% from 3.9% in May. Personal credit growth was

flat in June, following four straight months of fall. 

     Meanwhile, the data also showed the trend of slowing in money supply growth

in Australia continued in June with the pace of both M3 growth and broad money

declining. Both rose 0.2% m/m, leading to a slowing in y/y growth to 1.9% and

the lowest since 1992.

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

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