Credit growth “is likely to start easing slightly” Westpac’s economics team project.
Over March 2025, private sector credit increased 0.5%, stable with the trend over recent months.
But, “under the surface, the components indicates some shifting dynamics” Mantas Vanagas, senior economist at Westpac wrote in an analysis of RBA financial aggregates for March.
“To two decimal places, the growth rate in mortgage credit in March was close to 0.4%, barely rounding up from 0.45%, implying that the downside risks we have been highlighting might be starting to materialise.
“We do not anticipate that the changes will be abrupt – our forecast imply only a gradual moderation in the second half of this year to below 6%” annually, Vanagas said.
“Lower house price growth over the course of 2024 is likely to start feeding into residential credit figures. We estimate that the typical lag in that effect could be around half a year.
“However, it might be tempered as the RBA’s continues to ease monetary policy settings, attracting more demand to the housing market.
“We would expect to see consumer credit growth easing back down in April, in line with weaker consumer sentiment.
“However, consumer reaction to global economic news remains quite uncertain.
“Meanwhile, with business credit growth having already eased in March, we doubt that firms will have gained confidence to borrow much more in April and potentially beyond that, until there is more certainty about key global trade policy parameters.”