Mortgage and credit card enquiries accelerate in Q3 while demand for personal loans eases
Veda Quarterly Business Credit Demand Index: September 2013
Mortgage and credit card enquiries accelerate in Q3 while demand for personal loans eases
- Overall consumer credit demand rises 7.4% year on year
- Mortgage enquiries up 9.7% year on year
- Personal loan enquiries up 2% year on year
- Credit card enquiries up 13.7% year on year
Sydney, 24 October, 2013: Veda, Asia-Pacific's leading provider of consumer and commercial data intelligence and insights today released the results of its consumer credit demand index for the third calendar quarter of 2013. The index, which measures the change in consumer credit demand for the September quarter compared to the same period in 2012, showed that overall demand increased by 7.4% over the past year, up from 5.4% in the June quarter and the strongest quarterly result since 2006.
Overall mortgage enquiries increased to 9.7% in the September quarter, up from 7.9% in the June quarter, which at that time was the largest increase since June 2010. The trend in the housing market continues upwards, with record low interest rates and improved consumer confidence providing impetus. Growth in mortgage enquiries has proven to be a six to nine month lead indicator of housing turnover and price growth.
However, growth in mortgage enquires were not uniform across all states. The most significant growth was in NSW (+14.4%) and SA (+11.6). Growth in WA (+10.1%) also remained strong, however growth has slowed from being up 15% in the June quarter. Elsewhere, enquiries in VIC (+8.4%) have picked up strongly, while enquiries growth is less strong, but remains positive in QLD (+4.7%), TAS (+3.1%), ACT (+2.4%), NT (+0.7%).
“With the results in the September quarter we have now seen eight consecutive months of mortgage demand growth, with the rate of growth increasing across 2013,” said Angus Luffman, General Manager of Consumer Risk at Veda.
“During the last 18 months we have also seen a continuing trend of a greater proportion of enquiries from the 45+ age bracket. This tends to support other commentary and data indicating that the growth in housing market activity is being driven by increased housing market participation by investors rather than owner-occupiers. ”
The Veda Consumer Credit Demand Index personal loan and credit card data has also historically provided an early indication of movements in consumer spending and retail sales. For personal loan enquiries annual growth eased nationally from 7.7% to 2.0% in the September quarter. Weakness in personal loan enquiries has been particularly apparent in QLD (+0.2%), and TAS (+0.3%), with WA (+1.1%), VIC (+3.3%), NSW (+1.9%) and the ACT (+2.7%) also relatively weak. In contrast, growth was stronger in SA (+5.6%), and the NT (+12.8%).
“In terms of consumer credit, personal loan enquiries continue to slow after a number of quarters of very strong growth. It also appeared there was a slow-down in car loan enquiries in the weeks around the Federal election in September,” said Luffman.
“Credit card enquiries, however, jumped 13.7% compared to the previous year and the trend towards unsecured credit being taken as personal loans rather than on credit cards was reversed in the September quarter with credit card enquiry growth over six times that of personal loans.”
Credit card enquiries picked up strongly in the September quarter. Nationally, annual growth in credit card enquiries accelerated from 2.9% in the June quarter to 13.7% in the September quarter. Very strong annual growth in credit card enquiries of over 25% was recorded in SA (+25.2%) and the ACT (+27.7%). However, strength was seen across all states in the September quarter: NSW (+15.7%), VIC (+9.7%), QLD (+11.5%), WA (+12.7%), TAS (+8.4%), and the NT (+14.4%).
“The September quarter is seasonally a low demand quarter as consumers pay down balances ahead of taking on additional credit in the months before Christmas.”
“The September quarter 2013 results were driven in part by some discrete marketing campaign activity by lenders but regardless were unseasonably strong. A weaker than usual 2012 September quarter also contributed to the year on year result,” said Luffman.