Double-Digit Growth in Consumer Credit Demand
2nd Aug 2021

Rebound now hit by Pandemic Second-Wave

For the first time in three years, consumer credit demand has moved out of negative territory. According to the latest Quarterly Consumer Credit Demand Index (June 2021), demand recovered sharply in the June quarter (+29.1%), with applications for credit cards, Buy Now Pay Later (BNPL), personal loans, auto loans and mortgages all experiencing double-digit growth. A drop in the momentum of recovery is expected in the third quarter, with stay-at-home pandemic orders impacting around 10 million Australians

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Q2 2021 figures show double-digit growth in business credit demand, with solid gains across all categories of credit, according to the latest Equifax Quarterly Business Credit Demand Index (June 2021). Sustaining this pace of recovery into the third quarter is now under question as second-wave pandemic lockdowns show signs of dampening credit demand in NSW and Victoria.

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Cybersecurity readiness doesn't come easily. Reacting to a security breach is vastly different from being ready to act should a breach occur. Many organisations haven't previously focused on proactively protecting their critical information assets, but change is coming. The increased sophistication of today's threat actors heightens the chances that more organisations will find themselves the unlucky targets of cybercrime.

 

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A potential borrower with no defaults but a poor repayment history applies for a loan with a lender who uses only negative bureau data in their credit decisioning. Other things being equal, their application is likely to be approved. The same borrower applies to a lender with access to Comprehensive Credit Reporting (CCR) data, only to have their application rejected. 

The difference? One lender made their decision based solely on negative-only credit information like defaults, bankruptcies and the number of credit enquiries. The other lender made their decision based on both negative and positive CCR data. This lender could see that the applicant had a history of paying late and had many loans with multiple lenders.

 

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Rejecting a loan applicant because there is not enough information on their credit file to determine their risk can mean giving away a creditworthy customer. 

In today's disrupted marketplace, where customer-centricity and growth are crucial, there is a significant benefit to separating the likely good borrowers from the likely bad borrowers among those with limited credit history.

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No one wants to continue assessing customer income and expense data manually. Lenders are all too aware of the inefficiency of paperwork-heavy processes, and today's borrower wants a simplified and fast loan application experience.

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Business credit demand has returned to the same level it was in the March 2020 pre-pandemic quarter, driven by a bounce-back in asset finance (+8.9%). Business insolvencies have yet to match their March 2020 level (down -36% compared to March last year) but are rising, month on month up by +78% in February and +29.0% in March, according to the latest Equifax Quarterly Business Credit Demand Index (March 2021).

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Consumer credit demand continues to decline compared to last year, but the rate of decline is slowing compared to previous quarters. Despite credit cards and personal loan demand remaining soft, auto loans and Buy Now Pay Later (BNPL) applications continue to recover, according to data from the latest Equifax Quarterly Consumer Credit Demand Index (March 2021). Demand for mortgages grew throughout Australia up +23.5% compared to the March quarter 2020, with every state and territory experiencing growth. 

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Equifax's next-generation credit score has generated considerable interest for its ability to yield more predictive insight than our previous scores. Its step-up in predictive power and functionality makes Equifax One Score a powerful consumer credit risk analysis tool. 

Developed using innovative analytic techniques and incorporating recent data sets, our new score can facilitate better business outcomes for lenders across the customer credit lifecycle from financial literacy through to pre-screening, pre-qualification, origination decisions, account management and early collections.

Discover the most common questions asked about Equifax One Score.

 

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(29 April, 2021)

Whether or not the end of the JobKeeper wage subsidy will lead to a spike in corporate insolvencies is a hotly debated topic. Some believe that Australia's strong economic recovery and favourable trading conditions will insulate against a wave of business failures.

Others argue we can't be that lucky.

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Introducing a 'fit and proper person' test for key personnel of approved aged care providers is one of the recommendations made in the final report of the Royal Commission into Aged Care Quality and Safety. It's an acknowledgement of how vital it is for providers to understand more about their workforce's skills and experience.

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