The RBA this morning released its Financial Aggregate data – they call it private sector credit but its really data that shows the growth rate of debt.
The RBA said:
Total credit provided to the private sector by financial intermediaries grew by 0.3 per cent over August 2013 after increasing by 0.4 per cent over July. Over the year to August, total credit rose by 3.4 per cent.
Housing credit increased by 0.4 per cent over August following an increase of 0.4 per cent over July. Over the year to August, housing credit rose by 4.7 per cent.
Other personal credit increased by 0.2 per cent over August after being unchanged over July. Over the year to August, other personal credit increased by 0.9 per cent.
Business credit rose by 0.2 per cent over August after increasing by 0.4 per cent over July. Over the year to August, business credit rose by 1.4 per cent.
For all the talk of housing bubbles that has been going on lately you’d think there has to be an associated spike in demand for debt because after all that is how most Australians fund their purchases of housing.
House price rises without an increased appetite for debt is really a positive move for the balance sheet positions of all Australians as it means that net wealth is rising.
So while the RBA and APRA will be alert to a bubble in housing, if there is no big spike in borrowing to accompany it and if the savings rate stays strong, then there is little cause for concern.
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