The RBA has today released its latest Financial Aggregates report for the month of May which showed an increase in total credit of 0.4% taking the annual rate to 4.7%.
Total housing grew 0.5% to a 6.2% rate, personal credit fell 0.3% to just a 0.3% annual growth rate while business credit growth remains in the doldrums printing just 0.2% for a 2.7% growth rate for the year ending May.
Housing growth of 6.2% is pretty solid but this growth rate masks the big divide between owner-occupier growth and investment housing, with the latter running at an annualised rate of 8.3%, the highest rate since September 2010.
Owner occupiers on the other hand are only up 5.2%.
The RBA clearly wants its low rate policy to drive an improvement in housing on the basis that the wealth effect will drive momentum through the economy, aid spending and the transition to growth away from mining.
For the moment it looks like it’s working but the budget and consumer sentiment are big headwinds for the economy at the moment.
We’ll hear more from the RBA tomorrow afternoon at 2.30 pm with the release of the Governor’s statement after tomorrow’s RBA board meeting.