Demand for credit has accelerated to levels last seen in the high-flying days of the late 1980s, further boosting the case for an interest rate rise by the Reserve Bank of Australia (RBA) next week.
Figures released on Thursday by the RBA show total credit rose by 1.1 per cent in December - after a 1.7 per cent jump in November.
Economists had expected a 1.2 per cent increase.
While credit growth slowed in December compared with the previous month, annual growth accelerated to 16.5 per cent - the fastest pace since 1989.
Housing credit rose by 0.8 per cent in December for an annual increase of 11.6 per cent - a moderation from the previous year's increase of 13.7 per cent - while other personal credit rose 0.9 per cent in the month and 13.1 per cent over the year.
With annual underlying inflation at 3.6 per cent, well above the RBA's target band of between two and three per cent, most economists are already of the view that the central bank will raise rates after its monthly board meeting on Tuesday.
And the data only reinforced that notion.
"The moderation in year-on-year lending for housing in recent months will be welcome news for the RBA, but it is likely that the annual pace lending for consumption remains too high," RBC Capital Markets senior economist Su-Lin Ong said.
"Against the backdrop of intensified inflation pressures with core inflation uncomfortably high, there is little in today's data to dissuade the RBA from tightening further," she said.
"Despite the uncertain global backdrop and tumultuous state of financial markets, (RBA) governor (Glenn) Stevens is unlikely to waver."
The rampant demand for credit is continuing to be driven by the business sector, with growth of 1.6 per cent in December providing for annual growth of 24.3 per cent.
JPMorgan economist Helen Kevans said it was likely the borrowing by businesses would be used to fund investment in additional capacity and infrastructure, particularly in the mining sector.
She said while increased business investment would bode well for the Australian economy, the pace of credit growth would concern the RBA.
"With respect to monetary policy, while lending by corporates is deemed as more favourable than excessive credit inflated by household borrowing, RBA officials will be anxious that credit continues to expand so rapidly," she said.
"Despite RBA policy tightenings in August and November last year, credit growth has continued to accelerate in annual terms, signalling that further monetary tightening is indeed warranted."
A rate rise of 25-basis points next week, as is widely expected, would take the official cash rate to 7.00 per cent - its highest level since November 1996.
