Daily Commentary BY THE CURVE TEAM –

Lending Recovery

1st of April, 2021

Credit data and dwelling approvals point to an uplift in lending activity.

Overall credit growth was up 0.2% for February. Annual credit growth is 1.6%, which is set to go lower as the plunge in credit over covid are factored in.

Housing continues to be the standout in the recovery, up 0.4% for the month. Owner occupied is the main driver of this, with a 0.55% rise. New housing credit is up 44% on pre covid levels.

On the other hand, business and personal credit remain sluggish. Business lending was flat for February and personal credit was down 0.5%.

Dwelling approvals reflected the strong credit numbers, up 21.6% for February. This was much stronger than expected and follows a 19.4% drop in January.

Like owner occupied housing credit outperforming in the credit numbers, private detached housing approvals were up 15.1% for the month. The HomeBuilder scheme is likely playing a part, with $15 000 grants still available, which reduced by $10 000 at the start of the year.

The scheme has ended as of today, but applications can still be submitted until the middle of the month assuming the process had begun prior to today. Given this, a truer picture of dwelling approvals and credit should emerge from May onwards.

Josh Stewart

Associate - Money Markets