Daily Commentary BY THE CURVE TEAM –

Daily Insights – Credit Remains Strong

2nd of November, 2021

Housing Finance

  • Overall housing finance approvals were down 1.4% in September.
  • Investors though continue to increase, up 1.4%, whereas owner occupied was down 2.7%.

House Prices Continue to Rise

  • Potentially related to the decline in loan approvals is the continued run up in house prices.
  • They were up another 1.4% in October, to be 20.8% higher than last year.
  • Analysts are calling big declines in house prices once the RBA begins raising the cash rate.

Credit Data

  • Overall credit was up 0.6% for September, to be 5.3% higher than last year.
  • Business credit was up 0.7%, with lockdowns the likely factor.
  • In line with finance approvals rising, total housing was up 0.63%.
  • Owner occupieds was up 0.75% and investors up 0.31%. (From our first paragraph, housing approvals were still over $20 billion,which was lower than the previous month but still a positive number to increase overall outstanding credit).

Retail Sales

  • Were up 1.3% in September to be 1.7% higher than last year.
  • The figure remains volatile with lockdowns and elevated on pre covid levels.

Pressure on Overseas Central Banks

  • EU core inflation reached 2.1% annually, the same as Australia.
  • Headline inflaton was 4.2% for the year, with energy prices up 24% on last year.
  • In the US, wages are up 4.2% on last year.
  • All these are conditions conducive for central banks to raise interest rates.

Josh Stewart

Associate - Money Markets