KEY POINTS:
Lending figures out yesterday did little to bear out the Reserve Bank's comment last week that New Zealanders have been showing early signs of moderating their borrowing.
Borrowing by households, businesses and farmers last month have all accelerated on an annual basis.
Households' debt to banks and other lending institutions at the end of June was $159.3 billion, an increase of 13.6 per cent on June last year.
It is the highest annual increase since August last year.
The total is dominated by housing debt, which at $147 billion was up 14.4 per cent on June last year. Annual growth in mortgage debt has levelled off at 14.4 per cent for the past three months.
Growth in total mortgage debt reflects rising house prices and increases in the number of dwellings.
In dollar terms the monthly increase in mortgage borrowing was $1.59 billion, unchanged from May but down from a recent peak of $2.2 billion in March.
"It's certainly not falling off a cliff," said ASB chief economist Nick Tuffley. "A lot of the anecdotes suggest lending growth should be starting to slow, though it is not feeding through quickly into the Reserve Bank.
"The market does seem to be cooling. As a bank that is our experience. Inquiry levels have been dropping away over and above what you normally tend to get heading into winter. Mortgage brokers are reporting things are looking quieter as well."
There tended to be a lag between when mortgages were approved and when the purchase went through and the loan was drawn down, he said.
The Reserve Bank would have July's borrowing figures in front of it before its next interest rate decision in September.
"If they are still hearing a reasonably consistent message that lending inquiries are still soft, they will still have confidence that interest rates are having an impact."
The bank would also be mindful that a significant increase in the effective or average interest rates is still "in the pipeline" as fixed-rate loans come up for refixing over the coming year.
Lending to the agricultural sector at $33.3 billion is 13.3 per cent higher than June last year, up from year-on-year growth of 12.8 per cent in May.
"Business lending has also been holding up quite well despite the evident caution of business surveys in recent months. It may be that pre-committed investment plans are rolling on regardless for now."
At $67.9 billion it is up 16.3 per cent on June last year, an annual growth rate only once equalled, and never exceeded, over the past year.
"The household sector seems to be plateauing, but the other sectors aren't showing that yet," Tuffley said.
When he raised the official cash rate last Thursday, for the fourth time this year, governor Alan Bollard said that should be enough - provided early signs of a moderation of borrowing continued and the pressure on the economy's resources eased.
GOOD FOR BANKS
* Mortgage debt $147 billion, up 14.4 per cent on June 2006.
* Business debt $67.9 billion up 16.3 per cent.
* Farm debt $33.3 billion up 13.3 per cent.
