Veda Advantage: Australian Consumer Credit Demand Down, Mortgages Down 15%

Veda Advantage’s quarterly Consumer Credit Demand Index, released today shows consumers remain cautious about taking on new debt, with significant drops in demand for mortgage and personal credit.

The first home owner loan market has cooled considerably in the first calendar quarter of 2010, with mortgage applications down 15% compared to the same period in 2009. This was the first quarterly decrease in consumer mortgage demand since the September to December quarter in 2008.

Combined credit card and personal loan applications also declined, with a 2% drop in the January to March 2010 quarter, when compared to the same period last year. Although personal credit applications declined, it was the smallest drop in two years, suggesting credit growth may be on the verge of returning to positive levels.

Chris Gration, Head of External Relations at Veda Advantage, said the data highlights how effective the Government stimulus was in bringing forward mortgage demand. “One consequence of a withdrawal in Government incentives is a relatively sharp drop off in housing credit demand in 2010. On the other hand, Australian consumers appear to be continuing good saving habits picked up during the global financial crisis. Australians are concentrating on paying down their debts rather than extending more credit according to data from Veda Advantage’s most recent Australian Debt Study.

“Consumer mortgage applications have fallen substantially in this quarter, possibly influenced by rising property prices and a withdrawal of Government assistance for first home buyers.

Additional mortgage data from Australian Finance Group suggests first home buyers continued to decline as a proportion of the overall market in March 2010 to 10%, down from a market share of 28% in March 2009,” Mr Gration said.

Veda Advantage’s bi-annual Australian Debt Study* completed in March 2010, shows a significant shift in consumer behaviour towards saving, with a rise in intention to reduce the debt on credit cards over the next six months.

The study found only 2% of Australians* intend to increase the amount of debt on their credit card, while 64% of Australians surveyed intend to decrease the amount of debt on their card. Half of those intend to pay off the full amount owing on a credit card. Looking at those Australians intending to pay off all the amount owing, half are likely to be aged 50 years and above, be full time workers and on higher incomes.

Mortgages

Consumer applications for mortgages fell by 15% in the January to March quarter of 2010, compared to the same period in 2009.
Mortgage applications were also down by 8% compared to the previous September to December 2009 quarter.
Mortgage applications fell steeply in Queensland (21%) and New South Wales (20%).

Credit cards

Credit card applications fell by 2% over the previous March 2009 quarter.
Yet, applications increased by 6% compared to the previous September to December quarter of 2009.
Credit card enquiries fell for the 7th consecutive quarter year-on-year, since March 2008.

Personal loans

Personal loan applications fell by 1% in the January to March 2010 quarter, over the same period last year.
This was the 10th consecutive quarterly year-on-year decline in personal loan applications.

About Veda Advantage
Veda Advantage has been at the forefront of the information services industry for many decades. Issues such as privacy, data security, fraud and business intelligence are part of our commercial landscape. We provide insights into more than 16.5 million credit active individuals and 4.4 million companies and businesses. www.vedaadvantage.com