Overall credit growth, which includes, business loans, personal loans and housing loans, slowed to just 2.5 per cent in annual terms – the slowest in 9.5 years.

Business credit had its first monthly fall in almost three years, slipping 0.1 per cent to record the worst annual growth since April 2014.

Personal credit growth also slipped again in October. The annual rate of growth there is now the worst in a decade at -4.7 per cent.

"The lack of a credit pulse across the Australian economy reflects both consumer and business caution," CommSec's Craig James said. "Stimulus is expected to eventually lead to a pick-up in credit growth, but the missing ingredient in all of this is confidence."

NAB markets economist Kaixin Owyong said that weak business credit suggests investment is unlikely to pick up materially in the near term.

"The weakness in business credit is of particular concern for the RBA, which is forecasting a pick-up in investment to support growth."

RBA watches on

RBA governor Philip Lowe has been watching the credit growth numbers carefully, particularly in the housing sector, because of the bounce in Sydney and Melbourne property prices of more than 20 per cent in annualised terms.


"It seems to me quite possible that we could have a period now of rising housing prices, because construction activity is slowing while the population is still rising quite quickly. So there are some underlying drivers of housing prices," Dr Lowe has said.

"From a monetary policy perspective, it's not an issue at the moment, it would become an issue of credit growth accelerated rapidly, but I see no signs of that at the moment."

The central bank's last board meeting minutes noted that the pace of growth in housing credit for owner-occupiers had picked up only slightly, while the stock of housing credit for investors had continued to decline a little.

"This implied that the increase in new loans over recent months had been accompanied by faster repayment of existing loans, as usually occurs in the months immediately following an interest rate reduction."

JPMorgan's Tom Kennedy said the unresponsiveness of credit growth to recent property price strength lent some weight to the argument that price growth is now more narrowly focused and the result of limited turnover.

"Additionally, it could also be evidence of households paying down extra principal on outstanding debt as interest rates have been lowered this year," Mr Kennedy said.