Australian Credit Growth Slows Down Amid Investor Retreat

Australia's credit growth has slowed down significantly as investor activity retreats from the market. The Reserve Bank of Australia's (RBA) lending data for July shows that total private-sector credit rose by just 0.6%, lower than the 0.8% monthly increases recorded in May and June.

The slowdown is largely due to a decline in investor borrowing, which fell by 0.3 percentage points to 0.46% in July, its weakest monthly pace in around two years. In contrast, owner-occupier credit growth remained steady at 0.46%.

Westpac said that the divergence between investor and owner-occupier credit growth indicates that recent policy changes are having a more immediate effect on investment decisions. The bank noted that higher interest rates, lower house prices, and tax changes for investment properties have contributed to the slowdown in investor borrowing.