Mortgage growth falls to new historic lows as borrower caution rules over lower interest rates: RBA figures

September RBA housing credit figures have emphasised the point made by both Commonwealth Bank chief Ian Narev and RBA deputy governor Philip Lowe that lower interest rates are not encouraging borrowers to take on more housing debt.

Housing credit increased by just 0.4% over September, following an increase of 0.3% over August to be up  4.7% over the year to September.

This set new low for annual mortgage growth for RBA records going back to 1976.

The previous low was an annual growth rate of 4.8% in August 2012.

Since the RBA started cutting the cash rate in November last year annualised mortgage lending growth has fallen from 5.6% to 4.7%.

Putting this into context, between 2000 and 2004 – during the last housing boom – annual mortgage lending growth averaged between 15% and 22%.

The RBA figures show low credit growth in other sectors as well indicating business and consumer caution and an unwillingness to take on more debt.

Other personal credit (such as credit cards and personal loans) increased by 0.2% over September, after decreasing by 0.3% over August.

Over the year to September, other personal credit decreased by 0.9%.

Business credit increased by 0.3% over September, after decreasing by 0.1% over August.

Speaking at the Commonwealth Bank AGM yesterday, Ian Narev said interest rate reductions were being used to “accelerate repayment of debt”.