More rate pressure as debt balloons
Private debt grew by $27.4 billion in June, further strengthening the case for a rate rise when the Reserve Bank meets next week. A large contributor to the debt blow-out was an increase in personal debt of $5.5 billion instead of the usual $2 billion growth each month. This is believed to be due to high-income earners borrowing to buy shares and managed fund units to put in to superannuation before 30 June. Borrowings for homes in June totalled $12.1 billion, the largest monthly increase since March 2004. Business lending was also up with $9.9 billion in new debt, adding to an increase of 18.7 per cent over the past year.