The Reserve Bank's August financial aggregates show business credit growing at 10.9 per cent a year while housing credit runs at 7.3 per cent, a gap that sits at the centre of the Board's case for higher rates.

Credit is often discussed as a single number, but the latest data from the Reserve Bank of Australia (RBA) tell two different stories. Released on 30 September 2026, the day the cash rate target of 4.60 per cent took effect, the Financial Aggregates for August 2026 show lending to businesses expanding markedly faster than lending for housing.

That split mirrors the Monetary Policy Board's 29 September statement, which noted that new housing loans have declined noticeably, while business investment and debt growth are strong.

The August numbers at a glance

The RBA's August 2026 Financial Aggregates report growth in each category as follows (monthly change / year-ended change):

  1. Business credit: 0.9 per cent / 10.9 per cent
  2. Total credit: 0.6 per cent / 8.4 per cent
  3. Housing credit: 0.4 per cent / 7.3 per cent
  4. Personal credit: 0.7 per cent / 5.1 per cent
  5. Broad money: 0.1 per cent / 6.9 per cent

Business credit is the fastest-growing category on both measures. Its monthly growth of 0.9 per cent is more than double the 0.4 per cent recorded for housing. On a year-ended basis, business credit is growing 3.6 percentage points faster than housing credit.

Housing credit has not stopped growing; the divergence is about relative momentum.

The housing side: slowing under higher rates

The RBA has pointed to the slowdown in housing lending as evidence that its rate rises are working. Assistant Governor (Financial Markets) Christopher Kent said in a Sydney speech on 13 August 2026 that "the three cash rate increases earlier this year are having their intended effects", noting that lending and deposit rates had risen and housing credit growth had slowed.

Governor Michele Bullock told the House of Representatives Standing Committee on Economics on 18 September that new lending had declined and that housing prices had fallen in most capitals. The minutes of the August Board meeting attributed the price decline to rate rises, Budget tax changes and weaker sentiment.

The October 2026 Financial Stability Review (FSR) added detail on the composition of housing lending:

  • New investor lending has moderated from elevated levels.
  • The share of high loan-to-valuation lending has risen since the expansion of the Government's 5% Deposit Scheme, but "remains low overall".

The business side: investment, AI and a new kind of demand

The business picture is different. The Board's 29 September statement identified business investment and debt growth as strong, and listed strong AI-related demand among the upside risks that had materialised, pushing up technology-goods prices.

Bullock drew the link directly at her media conference on 29 September: "The AI boom is also adding to demand in the Australian economy at a time when we already have capacity pressures." She qualified the effect of one prominent category of spending. On data centres, she said: "A lot of that is imported, so it's actually not directly impacting on demand in Australia."

Kent had flagged a related point in August, observing that AI investment and higher offshore bond yields could make a given cash rate less restrictive.

Deputy Governor Andrew Hauser described it on ABC's 7.30 on 8 September as "a fairly conventional investment boom".

The data do not break down how much of the 10.9 per cent business credit growth is tied to AI or data centre projects, and the RBA material reviewed here does not attribute a specific share. What can be said is that the Board sees strong business investment and debt growth as part of the demand picture it is trying to cool.

Bank lending is not the only source of funds for companies. The FSR estimated that private credit accounts for about 10 per cent of total business debt, though less than 2 per cent of financial system assets. Banks' drawn exposures to private credit funds have an upper limit of 2.8 per cent of bank assets, with the actual figure likely much smaller. The FSR also noted that some private credit funds have had to enforce redemption limits.

On the health of business borrowers, the FSR found company insolvencies "around their longer-run average", though elevated in hospitality and construction.

Why the divergence matters for policy

For a central bank trying to bring inflation back to its 2–3 per cent target, the mix of credit growth carries information. Headline CPI was 4.0 per cent over the year to August 2026, while underlying inflation has been about 3.5 per cent for the past six months, according to Bullock, with the trimmed mean at 3.6 per cent in the June quarter.

If housing credit growth slows while businesses keep borrowing strongly to invest, overall demand may not cool as much as the housing data alone would suggest. Total credit growth of 8.4 per cent a year, sitting between the two, reflects that tension.

Bullock framed the broader problem on 29 September: "Inflation is too high and has been driven by domestic capacity pressures." The Board judged a further tightening was warranted to return inflation to target in a reasonable period, and said it "will continue to do what it considers necessary".

Productivity is the longer-term question hanging over any investment boom, and Bullock was blunt about it: "The bottom line is that productivity is doing nothing." On AI specifically, she said: "there possibly is productivity gains. When? I don't know."

The next set of figures that could shift the picture is the September CPI on 28 October 2026, ahead of the Board's decision at 2.30 pm on 3 November.

The bottom line

The August Financial Aggregates confirm the split the Board described: housing credit growth has slowed to 0.4 per cent in the month and 7.3 per cent over the year, while business credit is up 0.9 per cent in the month and 10.9 per cent over the year. RBA officials link the housing slowdown to this year's rate rises and see strong business investment, including AI-related demand, as a source of pressure at a time of limited spare capacity. The data do not show how much of the business borrowing is AI-related, and the RBA has not said how the divergence will shape its next decision.