Veda has today released its Consumer Credit Demand Index results for the June quarter of 2014, which registered a 3.0% fall in total annual consumer credit demand, although growth in mortgage enquiries remained solid.
Veda are the largest credit recording agency in Australia, and every application for any formal loan through any retail lender is recorded with them. As such, results published by Veda should be taken seriously.
According to the media release:
The downturn in the June quarter was driven by a sharp fall in personal loan applications as well as a moderation in growth of credit card applications. The significant slowdown in consumer credit demand follows a two year growth cycle which saw the strongest consumer credit demand since June 2008 recorded during the March 2014 quarter.
Angus Luffman, Veda’s General Manager of Consumer Risk, said the softening of consumer credit demand in the June quarter was a result of a number of headwinds that have hit Australian consumers in recent months.
“The Federal Government’s May Budget took its toll on consumer confidence, while unusually warm weather has sapped autumn and winter sales for clothing retailers. Most fundamentally, income growth has been subdued against the backdrop of weakness in the labour market.
“These factors can be seen in Veda’s latest consumer credit demand data, which suggests a reduced appetite for consumer credit in the June quarter, and also suggests that retail sales in the June quarter are likely to have been soft,” Mr Luffman said.
Growth in credit card applications eased to 1.6% in the June quarter…
Nationally, personal loan applications fell sharply to -7.1% during the June quarter…
Mortgage enquiries were solid during the June 2014 quarter, easing to 6.1%, according to Veda mortgage application data. Mortgage applications are not part of the Consumer Credit Demand Index, but are a good lead indicator of future activity in home buyer demand and housing turnover. Historically, movements in Veda mortgage demand have tended to lead movements in house prices by around six to nine months…