To our credit, more of us living within our means

PRIVATE sector credit levels fell to a 19-month low in November, a sign that Australians are becoming less keen on debt, economists say.

Total credit provided to the private sector by banks and other lenders was unchanged in November after a rise of 0.1 per cent in October.

November was the weakest monthly outcome since April 2011, according to the seasonally adjusted data released by the Reserve Bank on Monday.

Chief economist for CommSec Craig James said consumers' attitude to debt had become one of caution.

"The new mantra is 'living within your means' as opposed to the old theory that borrowing was the quick way to achieve a higher standard of living or lifestyle," he said.

"The main factor underpinning the conservative approach to lending is weak growth in asset prices, especially property.

"Clearly you are likely to be less willing to take on a large debt load if the price in the underlying asset is barely growing or, in some cases, going backwards."

Over the year to November, total credit rose by 3.5 per cent, the RBA said. Business credit decreased by 0.6 per cent in November, also the weakest since April 2011, but over the year to November business credit increased by 2.4 per cent.

Housing credit went up 0.4 per cent in November, after rising by the same amount in October, and was up 4.6 per cent over the year to November. Other personal credit fell by 0.2 per cent in November, after rising 0.1 per cent the month before, and fell 0.7 per cent in the year to November.

RBC Capital Markets fixed-income strategist Michael Turner does not expect a recovery in credit growth in coming months despite the RBA having cut the cash rate by 175 basis points since November 2011.

"While credit has become cheaper thanks to the 175 basis points of RBA easing done this cycle, the private sector's expectations of returns on investment have also fallen," Mr Turner said.

"We think this will continue to result in weak credit growth, with the housing sector to remain muted and businesses cautious on debt."

Mr Turner expects the RBA to cut the cash rate again in the second quarter of 2013.