Home lending is the only game in town for the country’s non-competing banks.
Figures out yesterday from the Australian Bureau of Statistics confirm that business lending continues to contract, personal finance is weak and housing is booming in comparison.
In fact the biggest news isn’t housing.
Going on the ABS’s figures, it’s the 12.9% plunge in commercial finance in the month, which is as big a contraction as we have seen.
The dollar figures are even more amazing: down from $31.086 billion in March, seasonally adjusted, to $27.06 billion in April.
That’s a $4 billion contraction, according to the ABS.
The April result followed a 20.5% rebound in March.
That figure obviously jumps around a lot and there’s some element of loans rolling over and not being renewed.
But it’s also a sign of how quiet demand from business is at the moment,
The Reserve Bank’s private credit figures show business credit has contracted in the past month or two, although some broking analysts say that when you add in cash raisings in the market, business fund raising from all sources is positive.
But good companies aren’t borrowing because they have no need to, poor companies are the ones being sent to the market to raise funds in many cases (if they are listed). If they are private its bad luck in a growing number of companies.
Fixed lending commitments fell almost 18% in the month. Now that might be a bit ‘rubbery’; in that it’s only a month, but it’s again an indication that demand for loans and actual lending by banks to business is very quiet.
The fall in commercial finance overshadowed a $300 million rise in the seasonally adjusted figure for housing from $15.750 billion in March to $16.050 billion in April.
Personal finance rose a derisory $10 million to a seasonally adjusted $6.270 billion, so it remains subdued, despite the strength in April in sharemarkets.
The lending finance figures therefore make something of a mockery of the reaction to the Commonwealth Bank’s 0.10% rise in its variable home loan rates and increases to its fixed lending rates.
If the Bank had wanted to remove itself from having the cheapest loan it would have lifted rates by around 0.20% or even 0.25%.
The 0.10% was a trial balloon to see what the level of criticism would be.
