House investor loan growth slows to crawl

Reserve Bank of Australia figures suggest investor housing credit did not increase in February.

Reserve Bank of Australia figures suggest credit to property investors stalled in February. (AAP)

Lending to businesses and property buyers grew slightly in February while personal loans continued to fall, statistics from the central bank suggest.

The numbers showed overall private sector credit grew 0.3 per cent - ahead of market expectations of a 0.2 per cent rise - and that credit for mortgages increased 0.3 per cent compared to the previous month, while credit to business was also up 0.3 per cent and personal credit fell 0.1 per cent.

The financial aggregates data released by the Reserve Bank of Australia on Friday indicated housing credit to owner-occupiers grew 0.4 per cent over the month while loans to investors was unchanged.

JP Morgan said monthly housing investor credit growth had averaged just 0.1 per cent month-on-month since mid-2017 and that the annual investor credit growth - less than one per cent over the previous corresponding period - was the lowest on record.

NAB economist Kaixin Owyong said she was surprised by the slight rise in owner-occupied housing credit, which followed a 0.3 per cent increase in January, but added that the overall trend in credit growth showed weakening.

"As the downtrend continues, we think that households are close to deleveraging, albeit from a record high level of gearing, where total household financial liabilities were 201 per cent of annual household income in Q4 2018," Ms Owyong said.

Personal credit - which measure households' borrowing for purchases other than property - fell 2.7 per cent over the year, a result that UBS economist George Tharenou called "a negative signal for retail sales".