ANZ economists Madeline Dunk and Adam Boyton predict private sector credit growth will steadily increase over the next two years. This rise is expected to be fuelled by a resurgence in housing credit, spurred by the Reserve Bank of Australia’s (RBA) interest rate cuts gradually influencing the economy. ANZ projects overall credit growth to reach 6.9 per cent year-on-year in 2025 and 7.5 per cent in 2026, with housing credit surpassing business credit as the primary contributor. ANZ is a major Australian bank providing a range of financial services to individuals and businesses.
The economists noted that housing market activity has rebounded since the RBA began easing rates in February. They pointed to forward indicators like auction clearance rates suggesting further strengthening of the market. ANZ anticipates an additional 50 basis points of rate cuts this year – in August and November – which they believe will further bolster housing demand. Housing credit growth has already risen to 5.6 per cent year-on-year in March 2025, a notable increase from 4.2 per cent in late 2023, despite relatively subdued sales volumes and moderate price increases throughout much of 2024.
According to ANZ, offset accounts, now used by over half of all borrowers, play a significant role in maintaining credit demand even as households hold greater liquid assets. Conversely, ANZ anticipates a slowdown in business credit growth due to hesitancy among firms to invest amid global policy uncertainty and diminished capital expenditure intentions. Credit growth to businesses is projected to decline to 6.9 per cent by the end of 2026, while personal credit growth is expected to ease to just 2 per cent by early 2027.
