Mortgage lending up just 0.3% in August as owner-occupiers continue to deleverage: RBA

May and June rate cuts have yet to stimulate a pick-up in mortgage lending.

According to  the latest RBA figures, housing credit increased by just 0.3% over August, matching  an increase of 0.3% over July.

Over the year to August, housing credit rose by 4.8% – the weakest annual growth in records going back 34 years.

“Housing credit has lost momentum under the weight of earlier tight monetary policy with the sector facing a number of headwinds,” notes Westpac.

The bank says owner-occupier credit is particularly subdued as the household sector continues to deleverage.

 “Three month annualised growth is now 3.1%, moderating from 6.9% at the end of 2010.

“In recent months many have maintained mortgage repayments at current levels, notwithstanding interest rate reductions. This results in a more rapid paying down of the loan.

“The investor market has been a little more resilient, with credit to investors up 5.4% over the year and 5.5% annualised over the last three months. 

“Monetary policy moved into the expansionary zone with the RBA's May and June rate cuts and further rate cuts are in prospect. We expect a lift in housing credit growth over the year ahead as people respond to the improvement in housing affordability. Although, a sustained strong upswing is unlikely in the current environment,” says Westpac.

Total credit provided to the private sector by financial intermediaries rose by 0.2% over August 2012, after rising by 0.2%over July.

Over the year to August, total credit rose by 4.1%.