Economists say the rise in non-bank market share will help “take some of the edge off” the downturn in credit availability from the major banks
Non-bank lenders are serving as a “buffer” in the housing market by servicing borrowers that have been turned off by banks’ tighter credit policies, according to ANZ Research.
According to an analysis from ANZ economists Daniel Gradwell and Shaurya Mishra, recent data from the ABS, APRA and the Reserve Bank of Australia has highlighted the “divergence” between banks and non-banks – and the stronger lending appetite in the non-bank sector is welcome news for the housing market. The economists say that while credit supplied by banks is slowing as a result of tighter serviceability requirements and macro-prudential measures imposed off the back of regulatory scrutiny, non-bank lending is on the rise.
The ANZ analysis reports that while housing credit across the banks increased 4.8% year-on-year, non-bank housing credit rose 13%.
The Reserve Bank has reiterated that its increasing optimism about the Australian economy does not mean the cash rate will be moving any time soon.
The RBA last week kept the cash rate at a record low 1.5% for a 27th straight month, but did note it expects economic growth to be stronger and unemployment to be lower than its previous projections.
“If that progress is made, higher interest rates are likely to be appropriate at some point,” the RBA said in its latest statement on monetary policy. “However, given the expected gradual nature of that progress, the board does not see a strong case to adjust the cash rate in the near term.”
The RBA has adjusted its 2020 unemployment forecast from 5% to 4.75% and confirmed that it expects wages growth to rise as the labour market tightens – albeit not quickly enough to send inflation spiking.
“That said, wages growth has been slower to pick up than its historical relationship with indicators of spare capacity in the labour market would imply,” the RBA says.