• Veda Consumer Credit Demand Index: Jan to Mar 2011

Veda Consumer Credit Demand Index: Jan to Mar 2011

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  • Demand for credit cards and personal loans flat year-on-year
  • Continued decreases in mortgage applications
  • Australians experience 'bill stress' - utility defaults increase 11% for quarter, amount owing on utilities bills increases by 30% over 3 years

Veda Advantage's quarterly Consumer Credit Demand Index* released today, shows consumer credit demand (credit card and personal loan applications) remains flat (0.4%) in the first calendar quarter of 2011, compared to 2010.
Angus Luffman, Head of Consumer Risk at Veda Advantage said, "Overall credit growth remains flat, however results vary across the states. Queensland, in particular, recorded a sharp decline in credit card demand (-13.2%), however, it is too early to determine whether this was a due to the floods experienced earlier in the year. In contrast, WA shows strengthening credit demand (credit cards up 4.0% and personal loans rose 5.6%) but continued weakness in mortgage demand (-18.4%)", he said.
Demand for personal loans increased by 3% in the January to March quarter in 2011, over 2010. This was the second quarterly year-on-year increase following 11 consecutive decreases from March 2008. Personal loan demand in Queensland fell by 1%, while New South Wales and Victoria both increased by 5% year-on-year.
Applications for credit cards fell by 2% in the January to March quarter year-on-year, despite two consecutive quarterly year-on-year increases in the latter half of 2010.  Queensland recorded the largest year-on-year decrease falling by 13%, while New South Wales and Victoria's results were flat.
Equifax's recent Australian Debt Study** found there was an overwhelming intention (61%) among those people with a credit card to reduce the debt on the card over the next six months. This included 44% of people surveyed who intended to reduce the amount owing on their credit card in full. Only 2% of Australians with a credit card intend to increase its limit in the next six months.
Applications for mortgages continue to decline, falling by 16% in the January to March quarter of 2011 over 2010. Among the states and territories, the most notable decrease year-on-year in mortgage applications was Queensland (-26%). In contrast, ACT recorded the smallest decrease on mortgage applications (-8%), followed by New South Wales (-9%).
"Credit demand has continued its stabilisation, remaining relatively flat in this quarter after declining for most of 2010. However mortgage enquiries have continued to decline after the very strong activity up until the March 2010 quarter. This is supported by findings in our most recent Australian Debt Study,where for the second consecutive survey, property purchases were the most common reason for consumers owing more than they did 12 months ago (40% in March 2011 compared to 22% in March 2010)", Mr Luffman said.
The Debt Study also shows 14% owe more than they did a year ago. For this group the concern about the cost of living, for items such as the rising cost of food and petrol costs, on the ability to repay debt has increased noticeably in this survey.
Bill stress is another factor consumers are contending with this year***. Further, Veda research into utilities bills shows the average amount owing on utility defaults has increased by 11% for the January to March quarter year-on-year. The amount owing on utilities bills defaults, which includes gas and electricity bills, has increased by 30% over the past three years," he said.
Credit cards

  • Credit card applications decreased by 1.9% in the January to March quarter when compared to the same quarter in 2010.
  • Credit card applications were up by 1.0% when compared to the October to December quarter 2010.
  • Among the states and territories, Queensland recorded the largest year-on-year decrease (-13.2%), with Northern Territory (-5.9%) and Tasmania (-5.6%) both falling.New South Wales (-0.1%) and Victoria (0.7%) remained flat, while the ACT (10.4%), South Australia (7.8%) and Western Australia (4.0%) all grew. 

Personal loans

  • Personal loan applications increased by 3.0% in the January to March quarter of 2011 compared to the same quarter in 2010.
  • In comparison to the previous December 2010 quarter, there was a 4.3% increase in January to March 2011.
  • Western Australia recorded the highest growth in personal loan applications in the first calendar quarter of 2011, increasing by 5.6% year-on-year. This was followed by New South Wales (5.1%), Victoria (5.0%),Tasmania (3.0%), and ACT (2.4%). Northern Territory (-2.1%), South Australia (-0.9%), and Queensland (-0.9%), all recorded negative growth.

Mortgages

  • Applications for mortgages fell by 15.7% in the January to March quarter of 2011 over 2010.
  • Mortgage applications were down 6.5% compared to the October to December 2010 quarter.
  • Among the states and territories, the biggest year-on-year fall in mortgage applications was in Queensland (-26.4%), followed by the Northern Territory (-22.5%), Western Australia (-18.4%) Tasmania (-14.0%), South Australia (-13.7%), Victoria (-13.8%), and New South Wales (-9.5%), while the smallest decrease was in the ACT (-7.7%).

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Media Information:
Sarah Jane Williams 9492 1040 or 0409 362 675
About Veda Advantage www.vedaadvantage.com
Veda Advantage has been at the forefront of the information services industry for many decades. Issues such as privacy, data security, fraud and business intelligence arepart of our commercial landscape.We provide insights into more than 16.5 million credit active individuals and 4.4 million companies and businesses.You can apply for a copy of your business or company credit file at www.mycreditfile.com.au
*The Consumer Credit Demand Index looked at more than 76 million consumer credit enquiries from October 2002 to 31 March 2011 registered on Veda Advantage's consumer database. Consumer Credit Demand measures application volumes for credit cards and personal loans over each quarter.
** Veda Advantage's Australian Debt Study Report was completed by Galaxy Research. It was the eighth in a series conducted on the Galaxy Omnibus. Where possible, comparisons were made across time. This most recent wave was conducted on the weekend of 18-20 March 2011. Previous waves were conducted on : 17-19 September 2010, 19-21 March 2010, 4-6 September 2009, 17-19 April 2009, 12-14 September 2008, 29 February-2 March 2008 and 21-23 September 2007. The sample for each wave was respondents aged 18 years and older, distributed proportionately throughout Australia. Interviews were conducted using CATI (computer assisted telephone interviewing) with telephone numbers randomised from electronic White Pages. All interviewers were personally trained and briefed on the requirements of the study. Age, gender and region quotas were applied to the sample.
Following the completion of interviewing, the data was weighted by age, gender and region to reflect the latest ABS population estimates.
*** Bill stress statistics are based on Utility default volumes and amounts recorded on the Veda Advantage's consumer database.Year-on-year changes in volumes and average $ default amounts were calculated for the March quarter 2011.
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Purpose of Veda Advantage media releases:
Veda Advantage media releases are intended as a contemporary contribution to data and commentary in relation to credit activity in the Australian economy. The information in this release does not constitute legal, accounting or other professional financial advice. The information may change and Veda Advantage does not guarantee its currency or accuracy.To the extent permitted by law, Veda Advantage specifically excludes all liability or responsibility for any loss or damage arising out of reliance on information in this release and the data in this report, including any consequential or indirect loss, loss of profit, loss of revenue or loss of business opportunity