The shadow of debt hangs over credit growth

Low interest rates are supporting lending activity to households and businesses, but growth has been subdued, as high levels of existing debt continue to weigh on credit expansion.

Housing speculation continues to drive credit growth across the country. But the overall response to low interest rates has been relatively subdued, reflecting the high level of existing debt and the fact that many households and businesses remain fairly cautious.

Housing credit rose by 0.6 per cent in June, to be 6.4 per cent higher over the year. Growth continues to be led by investors, with investor housing credit rising by 8.7 per cent over the year -- its fastest pace in six years.

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