The value of new lending commitments to households increased 2.6% in February 2019, seasonally adjusted, following a decline of 2.3% in January.
However, despite the apparent uptick in monthly ABS figures, year on year lending is down 15.6% overall excluding refinance. Specifically, lending for dwellings excluding refi is down 18.6% and lending for personal finance is down 16.3%.
Meanwhile, lending to businesses fell 2.4% in February and is down 3.3% year on year with weakness across most business lending categories.
ABS chief economist Bruce Hockman said, “Despite the rise in February, the longer-term story is largely unchanged with new lending to households remaining subdued and well down on levels seen over the past five years.
“Lending for owner occupier dwellings in New South Wales is a good example of this broader story, with the series still down over 20% from the peak of lending in August 2017, even after recording an 8.2% monthly rise in lending commitments in February,” he said.
At the national level, in February the value of lending for owner occupier dwellings for the month rose 3.4%, while lending for investment dwellings recorded a more modest rise of 0.9%.
The number of loans to owner occupier first home buyers rose 1.8%, slightly outpacing the rise in the number of loans to owner occupier non-first home buyers, which increased by 1.6%. However, both remain well below February 2018.
Mirroring the trend, the construction pipeline also continues to shrink with HIA chief economist Tim Reardon saying that access to finance is the leading cause.
“After five years of a sustained building boom, market confidence fell away in the later part of 2018 as dwelling prices corrected, adversely impacting all segments of the market. Investors and owner occupiers are delaying purchase decisions and foreign investment has also fallen dramatically for numerous reasons,” he said.
“The pipeline of building work which had expanded over recent years has shrunk over the past six months as the volume of work entering the pipeline fell away,” Reardon continued.
HIA expects the current credit squeeze to ease over the course of this year and that the fall in lending will be “modest by historical standards”.