The value of lending finance took a tumble in May, new figures from the Australian Bureau of Statistics have revealed.
According to the data, the value of dwelling commitments approved for owner occupied housing fell by a substantial 5.3% over the course of the month – to just above $18 billion.
The value of personal loans and commercial loans also dropped throughout May, falling 1.3% and 1.7% respectively to $8.9 billion and $45.5 billion.
chief executive officer John Flavell says the figures aren’t surprising, given that consumer sentiment has been sluggish.
“We can’t expect people or businesses to want to take on higher levels of debt when sentiment is low,” he said.
“While the May rate cut and benign Federal Budget caused consumer sentiment to lift in May, the surge in confidence was short lived, as new data shows sentiment fell 6.9% in June.
Data from the Westpac Melbourne Institute of Consumer Sentiment shows confidence is currently sitting 1% lower than its pre-Budget level and is, in fact, now sitting at the lowest point since the start of the year.
On top of that, Flavell says business confidence had sat at “subdued levels” for some time.
“While we saw a small spike in sentiment off the back of the Federal Budget, this surge is likely to be a short lived event,” he said.
“With so many economic problems happening abroad, business and consumer confidence will more than likely slide downhill over the coming couple of months.
“Until we see change abroad, I don’t expect to see a significant upswing in consumer sentiment and, in turn, no substantial uptick in the value of lending finance.
“We may turn a corner on the dwelling commitment front in spring, as this is a notoriously strong time for the property market. Until then however, I wouldn’t be surprised to see similar lacklustre lending finance results.”