Home loan growth at fastest pace since 2008
Year over year to December 2021, credit growth reached 7.2%, recording its strongest annual growth in 13 years according to RBA data.
This result exceeds the four-year high reported from October.
Westpac chief economist Andrew Hanlan said credit growth hadn’t reached those highs since November 2008, before the impact of the GFC.
“This represents a dramatic acceleration from the anemic 1.7% increase in 2020,” Hanlan said.
Year-over-year housing credit hit 7.4% in December, with homeowners leading the charge recording annual growth of 9.6% – again the highest annual result since 2008.
For investors, 12-month housing loans recorded annual growth of 3.4%.
Mr Hanlan said the housing sector was experiencing a rapid recovery, sometimes punctuated by closures.
“This strength is in response to record rates, the HomeBuilder program and a shift in demand as people seek more space at home,” he said.
CommBank senior economist Belinda Allen said the recent increase in fixed rate loans for homeowners and investors as well as rising expectations for official cash rate hikes in 2022 are expected to weigh on credit growth in the housing in the coming period.
“Regulators will remain alert to the pace of new lending and credit stock, as well as lending at high debt-to-income and loan-to-valuation ratios,” Ms Allen said.
Personal credit is falling
Personal credit fell 0.8% in December and remains 3.8% below levels a year ago.
December’s decline comes after gains of 0.6% were recorded in November.
Ms Allen said that although loans have increased for holidays and cars in the ABC loan data, households as a group have a large reserve of savings which has reduced the need for to borrow.
“At this point, the CBA card spend data has been encouraging during the Omicron outbreak, except for the first two weeks of January, but some degree of uncertainty may set in for large items that require often loans like cars, apps or vacations,” she said.
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Fixed mortgage 1 year (capital and interest) (LVR
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- Fast turnaround times, can meet 30 day settlement
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Image by Qimono via Pixabay.
The whole market has not been taken into account in the selection of the above products. Instead, a reduced portion of the market was considered. Products from some vendors may not be available in all states. To be considered, the product and price must be clearly published on the product supplier’s website. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au and Performance Drive are part of the Savings Media group. In the interest of full disclosure, Savings Media Group is associated with Firstmac Group. To learn how Savings Media Group handles potential conflicts of interest, as well as how we are paid, please visit the website links at the bottom of this page.