Almost all the net credit growth since 2012 has flowed into property, rather than anything else which will stimulate post-mining boom investment, new data analysis shows.
It is housing – rather than other types of lending – that is driving credit growth, with around 95% of the extra credit extended by banks since mid-2012 financing residential or commercial property, according to analysis of official figures by UBS.
The research found that of the total increase in credit since then, $60.6 billion had financed owner-occupied housing, $45.8 billion residential investment properties, and $10 billion had gone into commercial property.
Non-property business lending rose by just $3.2 billion, accounting for only 2.6 per cent of total credit growth over the period.
The finding shows the extent to which record low interest rates have helped to funnel tens of billions of dollars in debt into property, while doing little to spark increased business lending, Business Day
“Instead, many firms remain cautious about taking on new debt, or are reluctant to borrow because they lack confidence in the economic outlook.”
reported many firms remain cautious about taking on new debt, or are reluctant to borrow because they lack confidence in the economic outlook.