Loans for construction and new home purchases rose 1.7% in February, while loans for alterations and additions were up 2.7%. Home loans are up an incredible 15.6% on a year ago.

Total new loans (including personal, business and housing loans, and leases) rose 3.5% for the month to be only 5.5% shy of the 7.5-year high recorded in September.

Record low interest rates are driving the gains in lending, particularly in the housing sector, but confidence is more modest in the rest of the economy.

CommSec Chief Economist, Craig James, said, "The lift in borrowing across the economy in February essentially negates the prior month's weakness. Overall, lending is healthy, no doubt driven by housing. The hope would be that business borrowing continues to lift, driving investment and supporting growth."

James said it was uncertain if such strong levels of housing lending would continue, even if interest rates were to fall. "Borrowers are cautious about taking on more debt," he said.