Daily Commentary BY THE CURVE TEAM –

Hiccup in Credit Growth

1st of June, 2021

Credit growth for April surprised due to one key factor.

Overall credit growth rose 0.2% for April, below the expected 0.4%. Housing credit remained the backbone to this growth, up 0.51%.

This continues a meteoric rise from covid lows with new lending now 52% above pre covid levels. Investor lending also continues to strengthen after being slower to respond to the lows of covid.

Investor growth was up another 0.36%, while owner occupied lending rose another 0.51%. The momentum in housing lending since the start of the year has been very strong.

On the other hand, business lending dragged the overall figure down. It was down 0.3% for the month after rising 0.4% in March.

Recent capital expenditure figures for Q1 showed a positive trajectory, so if business confidence remains at elevated levels and fiscal and monetary support remain then business lending should lift.

Today the RBA will make their decision on monetary policy for the month, with no change expected. GDP partials ahead of Q1 GDP tomorrow will also be released, as well as building approvals and house price data updates.

Josh Stewart

Associate - Money Markets