Two key developments are expected to shape the monthly credit data for July. One is the beginning of a moderation in credit growth to housing investors as a result of regulatory pressure. Banks have raised mortgage rates to such investors, and will also be more restrictive in their lending policy given warnings by the regulator (APRA) that banks which exceed the 10% guidance on maximum growth in this segment will be subject to special attention and potentially be forced to make additional provisions. This may begin to affect the data in July or in any case soon, after a particularly strong expansion in June (12.3% mom annualised). Two, some revival in credit growth is expected to businesses which has been weak for the last four months.



"In light of recent legislation encouraging small investment activity through tax breaks, a pick-up in credit demand ought to materialise - and we are in any case rather optimistic about non-resource investment activity", says Societe Generale.



As to the mainstay of credit growth, lending to owner-occupiers for house purchasing, steady growth of 5 -6% is expected in annualised terms. In short, easy monetary policy is expected to remain effective in supporting credit growth.