Australian consumers borrowed less in the month of October with RBA data showing private credit growth at 0.5% (5.3% year on year) versus a YoY rate of 5.4% last month. A closer look at the data suggests Australians are interested in buying real estate and not much else. Even though housing credit growth was flat last month at 6.4%, the pace is still well above the 4.4% growth in Business credit and the rate of Personal credit; which actually dropped to -1.1% Year on year. It’s likely that the growth in housing credit has been supported by the RBA’s rate cuts in May and August. However, the RBA won’t miss the fact that lending over the last 12 months has a flat to lower trajectory, which may influence their policy directives going forward.
Australian banks continue to push up against the top end of the their price channels. We’re mindful of the rally in US banks helping to boost investor sentiment towards the sector, yet there is limited evidence domestically of any pickup in earnings on the horizon.
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