Yet despite these positive trends in credit demand, signs of financial vulnerability persist, marked by a significant rise in the dollar value of delinquent accounts across mortgages, credit cards and personal loans in Q2 2025 year-on-year. Concurrently, a decline in financial hardship assistance for both mortgages and non-mortgage products suggests that the benefits of rate cuts are not being felt uniformly.

Key themes explored below:

Unsecured credit demand continues to rise

Sustained movement in credit demand is evident in both secured and unsecured products in Q2 2025. While secured credit, driven by mortgage portfolios, saw a modest uptick of 4.1% in applications, the most significant shifts were in the unsecured space, with applications up 14.2% in June 2025 compared to the same period the previous year. 

There has been a strong increase in credit card applications, which grew by 13.4% year-on-year in the June quarter. Buy Now, Pay Later (BNPL) saw a significant jump, with a 30.2% increase in applications, largely attributed to the sector adapting to new regulations that came into effect on June 11 this year. 

Additionally, personal loan applications have seen sustained increases, up 8.5% year-on-year in the June quarter, continuing a trend that started in the latter half of last year.

High-value delinquency emerges as a key trend

A key trend has emerged across mortgages, credit cards, personal loans and auto loans, where the total dollar value of 90+ delinquent accounts is rising significantly in Q2 2025 year-on-year, even as the rate of delinquent accounts remains stable or improves. 

For mortgages, the number of accounts 90+ days in arrears in Q2 2025 is on par with the same period last year, but the total dollar value of these delinquent accounts rose by a significant 10.1%. Our analysis suggests some of this is coming from the greater than $1 million loan value share of the portfolio. 

Similarly, the late arrears rate on credit cards is stable compared with the same period last year, but the total credit limit in late arrears jumped by 9.6%, indicating that financial stress is intensifying for cardholders with larger credit lines. 

For personal loans, there has been a slight decrease in the number of accounts in arrears, but an increase in the limits by 22.2%, particularly at that 90-day level, which is concentrating default risk in these higher-balance accounts.

For auto loans, both early and severe arrears saw a modest improvement from the previous quarter. However, the overall yearly trend confirms a sustained increase in arrears for auto loan borrowers. The late arrears rate was up 16 bps year-on-year, with the total dollar value of these delinquencies climbing 7.6%.


For BNPL, late arrears climbed 104 bps year-on-year to a new high of 2.45%. The recent surge in early-stage arrears to 4.09% suggests widespread stress across the portfolio. This highlights the emerging credit risk from the large cohorts of customers acquired during the recent high-growth phase. As the BNPL sector adapts to new legislation, new accounts were up 25%, total limits up 34% and new account limits down by 25% in the June quarter compared to the same period the previous year. These adjustment-driven trends are expected to normalise in the coming months.

Interestingly, the dynamic of rising late arrears is not mirrored in the financial hardship figures for Q2 2025, which show a quarterly decline in consumers needing assistance for both mortgage (-2%) and non-mortgage (-1.8%) products. This confirms the positive impact of rate cuts for many, although the sustained rise in auto loan hardships highlights that the recovery will be uneven and pockets of vulnerability remain.

First home buyer intent translates to loan applications

Post-rate cut momentum is evident in the housing market, particularly among First Home Buyers. Our Access Seeker data, which shows pre-application demand, reveals a growing proportion of First Home Buyer demand, likely correlated with rate cuts. Intent to apply for a mortgage accelerated, increasing by 9% in Q2 2025 compared to the same period the previous year. 

This is starting to translate into formal loan applications, with this year’s second quarter showing the first positive year-on-year growth in applications from First Home Buyers in over 10 months. Application demand was up 6.9% in Q2 2025 compared to the same time last year. 

The surge in intent is being fueled by younger generations. While Access Seeker activity reveals year-over-year growth in housing market interest across all ages, there has been a notable shift in the First Home Buyer segment toward the 36-45 year old cohort. However, the younger group between 18-25 now makes up a growing share of total First Home Buyers seeking to buy, and the market is still dominated by the 26-35 year old cohort.

The surge is most prominent in more affordable states like South Australia (+10%) and Queensland (+8.2%), and in regional areas closest to capital cities, such as the Central Coast (+20%) and Toowoomba. This trend is not uniform, however, with First Home Buyer demand falling in less affordable lifestyle markets like the Gold Coast (-9%) and Sunshine Coast (-17%).

Accelerate time to ‘yes’

The evolving credit landscape, with its mixed signals of demand and concentrated risk, highlights the importance of a comprehensive and proactive approach to credit assessment. Equifax provides credit professionals with a deep understanding of potential risk through its extensive consumer and commercial data sources and credit reports. 

The Access Seeker report is designed to assist brokers and lenders with access to an individual’s consumer credit report and score early in the process. A critical advantage of running an Access Seeker report is that it does not impact the consumer’s credit score, allowing for proactive and informed decision-making without penalising your customers.

By leveraging Access Seeker reports, brokers can deliver a more valuable service to customers by helping verify credit commitments, identify undisclosed liabilities, and provide credit health insights. This can lead to more complete and accurate applications, which in turn can help lenders make faster and more confident decisions, accelerating the time to 'yes' and facilitating responsible lending practices for a more efficient and transparent lending ecosystem.

Contact the Equifax team to find out more on 13 8332 or equifax.com.au/contact.