Demand for credit from Australian businesses has increased in the past 12 months, despite weakness in the mining sector.
Australian businesses are borrowing more with small- and medium-sized businesses (SMEs) taking advantage of low interest rates.
According to the Veda Quarterly Business Credit Demand Index, applications for business loans, trade credit and asset finance rose 2.1 per cent in the three months to March 2014 compared to a year ago.
The growth came from non-mining states, where business credit demand was up 3.5 per cent, offsetting a 0.6 per cent slide in demand from the mining states of Western Australia, Queensland and the Northern Territory.
Most of the 4.2 per cent growth in business loans was driven by increased activity in the property market, with commercial mortgage applications up 18 per cent as SMEs take advantage of low interest rates.
Veda general manager, commercial credit, Moses Samaha said the growth in business loan applications from the property services industry, reflecting strength in mortgage applications, had offset a decline in the mining, utilities and transport industries in the past year.
“Veda’s Quarterly Business Credit Demand Index gives a particularly good indication of what’s happening at the SME level,” he said.
“The growth in commercial mortgage applications shows the same factors that are driving consumer credit demand such as low interest rates are driving SME interest in property.”