Demand for consumer credit rises in December

Peter Terlato 31 January 2017 NEWS

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Additional personal lending products drive credit surge.

Driven by a substantial increase in personal loan applications, overall demand for consumer credit in Australia rose sharply during the December 2016 quarter, according to the latest data.

Credit agency Equifax's Quarterly Consumer Credit Demand Index December 2016 reveals overall consumer credit applications increased 7.7% when compared with the same period in 2015.

Personal loan applications were decidedly higher in the last quarter than in December 2015, up 12.4%.

Personal loan applications were highest in New South Wales and the Northern Territory (both 14.5%).

Queensland (13.1%), Victoria (12.5%), Tasmania (11.3%), Western Australia (8.5%) and South Australia (6.6%) all recorded significant growth.

Equifax's report suggests the surge in growth was roused by new entrants within the personal lending space, offering unique products beyond traditional credit card and vehicle finance.

Peer-to-peer (P2P) lending remains a relatively new concept to many Australians. However, the idea seems to be catching on. The P2P lending space is becoming more competitive, with new lenders constantly entering the market, and more Australians taking advantage of the competitive rates on offer.

Credit card applications also rose in the December 2016 quarter, up 3% compared with December 2015.

Equifax's Index matches recent credit data released by the Australian Bureau of Statistics (ABS), which reported a 7.7% increase in personal finance commitments last November.

The strongest growth in credit card applications was in Victoria (6.3%) and the Northern Territory (4%).

Applications also rose in Queensland (2.8%), New South Wales (2.6%), South Australia (1.8%) and the ACT (1.5%). However, applications contracted in Tasmania (-1.4%) and Western Australia (-2.2%).

The annual growth rate of mortgage applications rose notably in the December quarter to 6.6%.

The strongest growth was seen in the ACT (14.9%), followed closely by Tasmania (11.2%), Victoria (10.6%), NSW (9.6%), Queensland (5.8%), and South Australia (3.3%).

Applications continued their decline in Western Australia (-10.6%) and the Northern Territory (-10.8%).

Despite the elevation in personal loan applications, auto loan applications continued to ease, down from 8% in the September quarter 2016 to just 4.5% in December.

Changes in overall consumer credit demand (quarterly year-on-year)

September 2015 December 2015 March 2016 June 2016 September 2016 December 2016
Credit Demand Index 6.2% 9.5% 4.4% 1.8% 2.5% 7.7%
Credit card 1.80% 7.3% 1.8% -0.7% -0.3% 3.0%
Personal loan 11.1% 11.7% 7.2% 4.5% 5.3% 12.4%
Personal loan (auto) -2.4% 6.7% 0.8% 8.8% 8.0% 4.5%
Personal loan (non-auto) 3.5% 7.5% 2.2% -4.0% -3.6% 15.2%
Mortgage demand 10.0% 2.9% -0.4% -3.2% 0.9% 6.6%

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