Credit growth was moderate in November as consumers and business are still wary about taking on more debt.

The amount of private sector credit issued by banks and other lenders was up 0.3 per cent in November, after rising by the same about in October, seasonally adjusted data from the Reserve Bank of Australia (RBA) shows.

Over the 12 months to November, total credit rose 3.8 per cent.

Commonwealth Bank senior economist Michael Workman said record low interest rates are not having the desired affect on spending.

“It’s not just about interest rate levels. In our view, moderate credit growth indicates that consumers and businesses remain cautious about increasing leverage because of uncertainty over job security and profitability,” he said.

“To be fair, the consumer and business (confidence) surveys are gradually improving. Better news on jobs and the growth outlook are required.”

Housing credit went up 0.5 per cent in November, and rose 5.1 per cent over the year to November.

Mr Workman said firm growth in home lending is being offset by relatively high repayment rates.

“Mortgage payers have been reluctant to reduce their repayments in line with lower mortgage rates over the past two years,” he said.

“Some recent RBA research has indicated that households appear to have used about two thirds of the savings from lower interest rates to repay debt.

“In some respects it negates the effectiveness of monetary policy. While housing lending has responded to lower interest rates, some of the more interest rate sensitive areas of the economy, like non-mining business investment, remain subdued.”

Business credit decreased 0.1 per cent in November, after a 0.1 per cent rise in October, and over the year to November it was up 1.9 per cent.

Other personal credit was unchanged in November, after decreasing 0.1 per cent the month before and rose 0.8 per cent in the 12 months to November.