An increasing number of Australians are applying for personal loans and turning away from credit cards and mortgages, according to new figures from Equifax.
The latest Quarterly Consumer Credit Demand Index from consumer credit bureau, Equifax, provides an early indication of movements in consumer spending and retail sales.
Key findings of the latest Index included a rise in demand for consumer credit of 10.3% in the June 2017 quarter, reportedly driven primarily by an increase in personal loan applications by 18.4% in the June 2017 quarter.
In the same period, credit card applications increased by just 2.3%, and mortgage applications fell by 0.9%.
Looking more closely at the personal loan figures, Equifax found that applications for car loans fell by 1.5%, while non-auto personal loan applications increased by 26.5%.
Also, over the past three years, applications to traditional lenders (financial institutions such as credit unions, local and international banks) remained stable, while applications to lenders outside this group (including recently established lenders with niche offerings, such as alternate payment options in an online, point-of-sale environment) increased 2.5 times.
According to Equifax senior GM consumer products, Angus Luffman, these figures indicate that Australian attitudes to credit are changing:
“The average value amount a consumer applies for on a credit card has doubled in the past three years. Yet, in the same period, the total credit card balances accruing interest have declined.”
“This suggests consumers are using credit cards more frequently for every day purchases, while also being careful not to add to the debt load. The lift in personal loans indicates consumers are turning to this line of credit as a means to support household and discretionary expenditure.”
“Given the current subdued growth in household incomes, and below-neutral consumer sentiment, it is understandable that Australians may be becoming more circumspect in their use of consumer credit products.”
Increase in consumer credit applications (quarterly year on year %)
|Sector||Mar 16||Jun 16||Sep 16||Dec 16||Mar 17||Jun 17|
|Credit Demand Index||4.4%||1.8%||2.5%||7.7%||5%||10.3%|
|Personal Loans (Auto)||0.7%||8.7%||8%||4.4%||-1.9%||-1.5%|
|Personal Loans (Non Auto)||9.8%||2.9%||4.2%||15.1%||19.9%||26.5%|