Consumer credit levels off
Personal consumer credit applications have remained flat in the first half of 2008, with an increase of only 0.5 per cent for personal loan and credit card enquiries from the previous year.
Personal loan account enquiries have had the largest quarterly decrease in five years, falling by 6.3 per cent in the second quarter of 2008. Personal loan applications also decreased in the past quarter, with 50,000 fewer enquiries compared with the same quarter in 2007.
However, credit card enquiries grew by 7.9 per cent in the April to June quarter compared with the same period in 2007.
Rory Matthews, the chief executive officer of Veda Advantage, which released the data, said the higher cost of living, interest rate hikes, the volatile global economy, and a tightening of lending criteria by banks caused the credit demand to level off.
“Combined credit card and personal loan applications are on par with this time last year. This is most likely a combination of consumers feeling the pinch of higher interest rates and a general increase in petrol and food prices together with the banks tightening the criteria when considering applications for a credit card or personal loan,” Matthews said.
“We are seeing the majority of Australians favouring credit cards over personal loans at a time when the dollar amount of defaults is at its highest level ever.”
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