Australian homeowners are splurging on debt including home loan mortgage debt with credit figures showing robust growth despite higher interest rates, indicating the housing sector is not in a “black hole”.
Total credit provided to the private sector by financial intermediaries rose by 1.3 per cent in January, following an upwardly revised 1.0 per cent rise in December.
Over the year to January, total credit rose by 14.9 per cent.
Commonwealth Bank senior economist John Peters people are still taking out loans and taking on big debt. “Certainly housing in not in a black hole,” he said.
Mr Peters said over the past few years housing has been a negative contributor to growth, but along with these figures it may turn into a slight positive.
National Australia Bank senior markets economist David de Garis said that while business lending growth was expected to rebound after lower-than-trend growth the previous month, the rise in personal credit caught people by surprise.
He said personal credit had appeared to be slowing down, but the pickup was a sign of increased consumer confidence.
As a result, the Reserve Bank of Australia (RBA) would pay close attention to these numbers and future economic data to determine if its current monetary policy will contain inflation, he said.
However, he did not expect rates to move in the near-term. “It really just keeps the Reserve Bank firmly on hold,” Mr de Garis said.
Source: AAP
