Meanwhile the four official interest rate hikes and the additional 0.35% for most banks and financiers since last August have brought home lending and business loans to a halt.
Figures released yesterday by the Australian Bureau of Statistics show that total commercial finance commitments dropped a sharp 10.4% in February, to $45.723 billion.
That’s news which will please the Reserve Bank which yesterday revealed that it was now looking for a faster fall in inflation than it was expecting in February.
The bank’s credit monthly credit figures have been hinting at a slowdown, especially in housing finance, but the ABS figures drill down deeper into the numbers.
They clearly show that Australians are pulling their horns in: whether they are business or private consumers.
Considering the figures are for February, when a combination of sharp falls in the local market, a slew of high profile margin calls, the interest rate rise from the RBA and the central bank’s stepped up campaign to curb demand and inflationary pressures, the slowdown in lending was surprising quick.
Lease finance dropped 4.4%, to $596 million while housing finance for owner occupiers fell 6.0%, as reported on Monday, to $14.947 billion.
Personal finance commitments went against the down trend, rising by an adjusted 0.9% in the month, to $7.451 billion.
Economists said that the rise in personal lending was not positive.
It in fact showed behaviour typical of consumers pulling their horns in.
Loans taken out by people to consolidate existing debt were up 24.3% on February, 2007, while refinancing of existing loans soared by 54.2% per cent in annual terms.
Many of those refinancings were for existing mortgages taken out with non-bank lenders, but now switched to traditional banks.
New business loans were 8% cent higher than a year ago, sharply down from the 46% rise in January. That would match with the downturn in business confidence first reported in the National Australia Bank business survey in March, and then again in April.
And, with the local stockmarket down more than 11% over January and February, margin calls were a big factor in impacting the lending figures.
We know the likes of Allco, Tricom, ABC Learning Centres and a host of other companies had high profile problems with margin loans in February (this of course has continued into this month with Opes Prime and Lift capital falling over.
Cancellations and reductions of revolving credit commitments totalled $16.8 billion in February, up 148% on the same month of 2007.
This was after a record $18.9 billion was cancelled in January.
Most of that $35 billion plus was margin calls being made and the loans wound up by the margin lenders.
