Consumer credit demand drops 5.1 per cent since March
Consumer credit demand has dropped 5.1 per cent since March, Veda's quarterly consumer credit demand index has revealed. Despite the grim result, demand in the April to June quarter represented a 2.8 per cent rise year-on-year.
The quarter "closes out what has been a very soft financial year for credit demand", Veda head of consumer risk Angus Luffman said. While the data in the final quarter "reveals some positive trends in certain types of consumer credit" such as personal loans, Luffman said "overall credit demand is still behind on pre-GFC [global financial crisis] levels".
Credit cards continued to record weak growth, diving to minus 8.9 per cent - well below the previous March quarter. Year-on-year performance saw credit card demand post its second consecutive decrease of 1.2 per cent.
The drop in credit card demand appeared to be offset by a rise in consumer demand for debit cards, Luffman noted. He cited the impact of new responsible lending laws on banks' conversion rates and the continuing 'save not spend' focus of consumers as contributors to the "patchy growth in credit cards".
On the upside, personal loans recorded their third straight quarterly increase year-on-year, after 11 consecutive decreases dating back to the March quarter of 2008. Personal loans increased 6.9 per cent since June 2010, but were down marginally by 1.1 per cent on the previous quarter.
Mortgage enquiries declined 17.2 per cent over the period of July 2010 through to June 2011. Applications for mortgages posted their sixth consecutive quarterly decrease - down 10.8 per cent in the June 2011 quarter compared to the same time last year. Even so, the recent June quarter declined at the lowest rate out of the past six quarters.
Luffman said the contrast in the yearly and quarterly performance results suggested "a levelling in mortgage demand", with year-on-year declines beginning to slow and quarter-on-quarter results showing signs of growth.
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