Reserve Bank data shows bank lending to businesses slumped more than NZ$2 billion in December from November, driving a fall in overall bank lending in the month of NZ$1.971 billion. Lending to households rose NZ$356 million over the month, while lending to farmers fell a further NZ$192 million to a five month low. Total farm lending at the end of December of NZ$46.916 billion and is now below its level in August, although up 8% from December a year ago. Business lending fell 7.2% over the year to NZ$75.087 billion, its lowest level since April 2008, while household lending was up 2.7% from a year ago to a record high NZ$179.277 billion. These figures suggest farmers will find it difficult to buy farms with debt in the coming months, while business lending is either dropping because of a lack of demand or banks are withdrawing facilities. Lending to households is still growing, but at a much slower rate than in previous years, suggesting lending support for property investors and first home buyers to push up house prices will be limited. The figures also reinforce the imbalances in the economy where lending to households for property investment increases while lending to businesses slumps.
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