Business lending down, home lending up

Total business loans issued in April fell 23 per cent to $27 billion from a high result of $31 billion in March.

Nomura Australia economist Stephen Roberts said the only area of finance that is growing is home lending. “What seems like a promising recovery one month ago has given up the ghost.”

The governor of the Reserve Bank Glenn Stevens has warned that low interest rates and boosted federal government first home buyers grants could lead to borrowers over extending themselves. “There is a reason for care, both by the Reserve Bank and private lenders.”

Business lending has fallen 20 per cent since April 2008.

The first home buyers grants of $14,000 for existing homes and $21,000 for new homes were extended through to September, after which they will phased down to their previous levels of $7,000 and $14,000.

Source: The Australian Financial Review