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Veda Advantage Credit Demand Index - October to December 2009
3 February 2010
- Business Credit Demand up 11% year-on-year
- Mortgage Applications up 8% year-on-year
- Credit Cards and Personal Loans down 8% year-on-year
2 February 2010: Veda Advantage's quarterly Credit Demand Index*, released today, reveals record year-on-year increases in business credit demand, significant increases in mortgage applications and further declines in personal loans and credit card enquiries in the final October to December quarter of 2009.
Mortgage applications increased by 8% in the December quarter of 2009, over the same period in 2008. Combined credit card and personal loan applications fell 8% over the October to December quarter 2009.
The Business Credit Demand index saw an 11% increase in credit demand in the commercial sector in the October to December quarter of 2009 over the same period in 2008. (More on business credit demand - page 3.)
Chris Gration, Veda Advantage Head of External Relations said: "both consumer and business confidence appears to be rising steadily, largely driven by last year's Government stimulus measures. Consumer credit demand for the final quarter of 2009 was once again underpinned by significant increases in mortgage applications. We may see a lift in demand for credit card and personal loans across 2010, reflecting the reduced amount of money available to first home buyers this year.
"Growth in short-term credit applications reflects businesses rushing to take advantage of Government tax incentives for equipment or automotive purchases, which expired on December 31, 2009. This trend may also reflect the need for liquidity after a challenging year with high demands on business cashflow," Mr Gration said.
Consumer credit demand - Mortgages
Mortgage applications continued an upwards trend across the 2009 calendar year, increasing by 8% in the October to December quarter compared to the same period in 2008. The previous July to September quarter of 2009 saw a 32% increase compared with the same period last year.
In a state-by-state comparison, Victoria and the ACT had the highest mortgage growth year-on-year, rising by 16% and 14% respectively. Mortgage applications in New South Wales increased by 7%, Queensland by 6% and South Australia 1% over the same period.
Mortgage applications continued to increase across 2009, however the volume growth in the final quarter decreased for the first time compared to the July to September quarter of 2009.
Consumer Credit Demand - personal loan and credit cards
The 2009 calendar year ended with combined credit card and personal loans down 14% on the 2008 calendar year. Credit card and personal loan enquiries continued to decrease year-on-year across every quarter of 2009, indicating the popularity of credit cards and personal loans remains below levels experienced across most of 2008.
The final quarter of 2009 ended with an 8% decrease in personal (credit card and personal loan) credit demand. This followed a 14% decrease in the July to September quarter, a 20% decrease in the April to June quarter of 2009, and a 13% decrease in the January to March quarter of 2009. All comparisons are compared to the same quarter of 2008 (graph page #2).
Credit card enquiries declined for the sixth quarter in a row, falling by 13% year-on-year. This followed an 18% decrease in the July to September 2009 quarter compared to the same period in 2008.
Personal loans also declined for the ninth consecutive period, a 1% decrease over the October to December quarter of 2008.
Mr Gration said: "While applications for credit cards and personal loans continue to decline year on year, quarterly volume comparisons reveal notable increases of 12% in both categories of credit application, when compared to the previous July to September quarter of 2009. This indicates some consumers may be regaining confidence.
"The trend in consumer credit demand over the past 18 months shows a decline in enquiries for both credit cards and personal loans, however there are signs the decreases might be abating. There was a 7% quarter-on-quarter increase in personal loans, and credit cards also increased by 15% compared to the July to September quarter," Mr Gration said.
Business Credit Demand
Overall, the latest Veda Advantage Index indicates Australian businesses have regained confidence in business credit during 2009. Business Credit Demand increased across every month since August 2009, with the final October to December quarter up by 11% year-on-year. November and December 2009 recorded the largest increases in business credit demand on record, increasing by 11% and 21% respectively, on the same period in 2008.
ACT recorded the largest increase in credit demand of all the states and territories, increasing by 18% in the October to December quarter year-on year. Queensland business credit demand increased by 17%, NSW by 9% and Victoria by 14% over the same period.
"The Veda Advantage data indicates there were significant increases in asset related lending such as for cars, computers and business equipment, with a rise of 32% year-on-year in the December quarter 2009 from the December quarter 2008. This increase is a reversal of seasonal trends illustrating the impact of the Government stimulus and tax incentives. There was a 23% increase in the December quarter 2008 compared with the September quarter 2009. This is significant given the traditional decline in asset related lending activity during the December quarter and indicates there was a rush in credit applications to take advantage of the Government tax incentives," said Mr Gration.
Business credit accounts covered in this Index include: 30 day loans, hire purchase, lending proposals, commercial rentals, credit cards, bill of sale, utilities, personal commercial loans, real property mortgage, overdraft and more.
Source: Veda Advantage analysis January 2010
Source: Veda Advantage analysis January 2010
*the October - December 2009 year on year increases in business credit demand were the largest year on year quarterly increases on Veda Advantage records.
-Ends-
Media Information:
Sally Robertson (02) 9492 1089 or mobile: 0400 927 003
Kevin Burke (02) 9492 1042 or mobile: 0415 945 869.
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*The Business Credit Demand Index looked at more than 6.3 million credit enquiries from 2004 to December 31, 2009 registered on Veda Advantage's commercial database. Business CDI measures total Business Credit application activity over each quarter, comparing it with year on year analysis. Business CDI looks at all account types, including 30 day account, hire purchase, lending proposal, real property mortgage, leasing, commercial rental, communication services, credit card premium finance, seven day account, trade finance bill of sale overdraft, personal loan, utilities, cheque wholesale finance, cash on delivery factored account, 60 day account, continuing credit contract, 90 day account, bridging finance, deferred payment debit card.
** The Consumer Credit Demand Index looked at more than 42million consumer credit enquiries from October 2002 to December 31, 2010 registered on Veda Advantage's consumer database. Consumer Credit Demand measures application volumes for credit cards and personal loans over each quarter.
DISCLAIMER
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.
