Mortgage debt pile is now growing at its slowest annual rate in a year

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The mortgage growth spurt of the past two years is rapidly starting to fade, with annual growth in the mortgage stock slowing to its lowest level in a year in February.

But meanwhile business lending, which has been crushed by the pandemic, is now seeing its fastest growth since the onset of Covid.

New Reserve Bank industry lending figures show that in February the total stock of home loans – the nation’s mortgage stack, if you will – rose by about $1.5 billion (0.4%), which was down from the $1.7 billion (0.5%) increase reported in January.

There is an argument that if you remove months that were somehow affected by Covid lockdowns or restrictions then you have to go back to 2018 to find such slow monthly growth rates . Arguably the only exception to this is post-lockdown June 2020, which also saw growth of 0.4%.

Regardless, annual growth in the country’s mortgage stock continued to slow – to 9.5%, after 10 months of double-digit growth.

At the end of February, the mortgage stack (from both banks and non-bank lenders) stood at $334.1 billion, up from $305.1 billion in February 2021. This is another significant addition. to the pile over the course of 12 months, but the growth rate has slowed markedly in recent months – with monthly growth falling from 1% or nearly 1% each month in the first half of the year to 0.4% in February.

As mentioned above, however, this is a different theme developing in the corporate sector.

The annual growth of corporate loans dipped into negative after the start of the pandemic, but is again clearly on the rise, with the annual rate reaching +7.6% in February. That’s the fastest pace of annual growth since July 2019. The business loan stack stood at $125.4 billion at the end of the month – a new all-time high.

Agricultural loans, however, continue to languish, falling at an annual rate of 1.3% in February (to $61.5 billion), the largest annual decline since April last year.

Dairy loans continue to lead the falls. Outstanding dairy loans fell to $36.7 billion in February, some $1.9 billion – 4.9% lower than in February 2021.

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