There has been growth in the mortgage demand and in business credit demand. Even the consumer credit card and personal loan markets are starting to see some signs of life.
According to Veda Advantage, consumer credit demand in terms of personal loan and credit cards is down slightly while mortgage applications are up. Business credit demand is also up in the last few months of 2009. These statistics are based on credit and mortgage inquiries for millions of people and businesses and compared to statistical findings from 2002 to the present. The demand increase seems to reflect growing confidence in both businesses and consumers int he financial market. This may in part be caused by people hoping to take advantage of government stimulus and tax incentives.
Consumer credit demand for mortgages
Mortgage applications have grown by 8% this past October through December quarter as compared to the same quarter in 2008. This trend of growth was also present in the previous July through September quarter where there was a 32% increase from the 2008 quarter.
When examined on a state by state comparison there were increases across the board. ACT and Victoria saw the highest rises in mortgage growth at 14% for ACT and 16% for Victoria. In New South Wales the growth was up 7%, in Queensland up 6%, and in South Australia up 1% for this same stretch of time. While the applications for mortgages grew all through 2009 the actual volume growth in the final quarter was down slightly compared to the previous quarter in 2009. This is the first time that the volume has decreased from the previous quarter even though mortgage applications were up.
Consumer credit card and personal loan demand
It would appear that the popularity of credit cards and personal loans has waned in the past year. Both are still below the levels by 14% that they were in 2008. As a matter of fact, in the last quarter of 2009 there was an 8% decrease in both personal credit card and personal loan demand. In the quarter previous there was a 14% decrease from July to September and a 20% decrease from April to June in 2009. Even in the January through March 2009 quarter there was a decrease of 13% compared to the same quarter n 2009.
Requests for credit cards fell for the sixth straight quarter by 13% year on year. This was after there was an 18% reduction in enquiries for credit cards from July through September in 2009 as compared to the same quarter in 2008. Personal loans also fell for the ninth time in a row, falling 1% in the October to December quarter in 2008.
Even though these consumer credit demand numbers have decreased on a yearly basis the quarterly findings reveal some increases. These increases seem to indicate that consumer confidence is growing, even if it is at a cautiously slow rate. The same is true for personal loans, which also seems to recede a bit when one takes into account the fact that the amount of decreases is slowing. All of these factors point to consumers being more willing to take on debt and hope that the downturn in the economy is turning around.
One of the biggest indicators of confidence in the economy is seen in the growth of business credit demand. Unlike consumer credit it has increased every month since August 2009, up in the final quarter by 11%. The last two months of 2009 saw the biggest increase in business credit demand that has been recorded by 11% in November and 21% in December from the same months in 2008. When you compare territories, the largest increase was in ACT which saw an 18% increase from October to December in 2009. Following suit were Queensland with a 17% increase, Victoria with a 14% increase, and NSW with a 9% increase during the same time.
These numbers indicate increased lending for business equipment, computers, and vehicles up 32% from December 2008. The increases are likely based on the Government stimulus and tax incentives shown by the rush to get in credit applications in order to take advantage of them.
While Australians are not out of the woods when it comes to the economy and consumer credit demand. As far as the economic and credit crunch go it seems to have only abated slightly. It remains to be seen if this growth will continue in the absence of Government incentives but the news for now is good. Improving consumer confidence is an integral first step in improving the overall health of the economy. While consumers are experiencing growth in the mortgage market they are not yet ready to jump into the credit card and personal loan market with quite as much faith. Hopefully, the growth in the business sector will provide consumers with enough confidence to continue spending and help the Australian economy move forward in 2010.