Daily Commentary BY THE CURVE TEAM –

Daily Insights – Loans and Buildings Approvals Soar

1st of October, 2021

Total Credit Ticks Up

  • Total credit was up 0.6% in August following a 0.7% and 0.9% rise in July and June respectively.
  • Business credit was up 0.6% for August and 3.2% for the last 3 months as lockdowns meant businesses desired more cash to whether the decline in activity.
  • Housing credit continues to rise sharply, up 0.80% for August (0.80% owner occupied and 0.20% for investors). 3 month annualised growth is 8.1%.
  • This is fuelling increased speculation of macroprudential reforms.
  • Total deposits were also up 0.4% for August, with cash and deposits up 4.5%.

Loan Deferrals Under Control

  • 0.5% of total loans, amounting to $11.9 billion are currently deferred, with the ongoing lockdowns pressuring repayments.
  • This contrasts to the beginning of the pandemic last year, when 18% of small and medium businesses and 11-12% of mortgages were deferred.
  • According to Banking Day, 45% of Macquarie’s deferred loans were investor loans. For NAB, Westpac and CBA, the portion was 35%.
  • For the full Banking Day article: https://www.bankingday.com/public/6a87c2b7-6448-41d9-b82b-d83ba48163d2

Building approvals Shock Spike

  • They were up 6.8% in August.
  • This goes against the downward trend since the end of HomeBuilder grants.
  • It could be a reflection of the volatility in the data, so this month’s data should be viewed in context with future months.
  • They remain 31.2% higher than this time last year.

Josh Stewart

Associate - Money Markets