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January 30 2013, 00:01AM

By Caroline Smith

SYDNEY, Jan 30 AAP - Demand for credit is on the rise for the first time in a year but it's too early to talk of a turnaround in consumer spending.

Overall credit demand rose 4.1 per cent in the year to December, figures from data company Veda showed on Wednesday.

Veda general manager of consumer risk Angus Luffman said Australians were beginning to embrace borrowing again - albeit tentatively.

"Consumer credit is showing a solid pace in growth for the first time in over a year," he said.

"We saw the credit demand trend move upwards through the December quarter, which was all driven by personal loans, suggesting that Australian consumers were feeling good enough to borrow for some bigger-ticket purchases.

"The continuing weakness in credit cards and mortgage enquiries still indicates that the attitude of consumers towards borrowing is still broadly one of caution."

Veda's latest consumer credit demand index also showed credit cards applications falling in most states and down 2.0 per cent overall.

The number of people applying for credit cards fell in NSW ( minus 1.5 per cent), Victoria (minus 2.3 per cent), Queensland (minus 2.5 per cent), South Australia (minus 1.5 per cent) and Tasmania (minus 5.3 per cent).

Western Australia showed the only growth in this area, with a rise of 1.0 per cent.

But personal loan applications were up in all states, with overall applications for personal loans were up 10 per cent.

There were moderate increases in NSW of 8.6 per cent and Queensland (6.2 per cent).

Double-digit rises were experienced in the Northern Territory (14.3 per cent), Western Australia (13 per cent), Victoria (11.8 per cent), South Australia (11 per cent), and Tasmania (12 per cent).

Mortgage enquiries were flat over the past year, but there was some variation between the states, with NT and WA showing strength (12.6 per cent and 11.1 per cent respectively) on the back of the resources boom.

South Australia showed a lift of 4.8 per cent, while Victoria remained flat (0.5 per cent), and falls were recorded in NSW (minus 5.7 per cent), Queensland (minus 2.8 per cent) and Tasmania (minus 7.6 per cent).

Mr Luffman said the flat trend did not bode well for Australia's housing market, given weak homebuyer demand.

"There is little evidence in the latest Veda data that the RBA (Reserve Bank of Australia) rate cuts are having much effect in reigniting housing turnover," he said.

He said the Veda data showed house price growth was likely to remain subdued.