Australian Credit Card And Personal Loan Applications Decline.

Post by Sharat on April 22, 2009 · Under Australian Economy, credit cards, loans, personal loans · Comment 

The number of borrowers applying for unsecured lending products such as personal loans and credit cards has declined by 13 per cent in the first quarter 2009, a new report by a market analytics firm suggests.

The report issued by credit data firm Veda Advantage also suggests that more consumers are inquiring about the possibility of obtaining a first mortgage with the number of enquiries increasing by 14 per cent.

“There is a trend for people looking into the viable property market given the abnormally low interest rates and the Government’s incentives for first-home owners,” Veda Advantage chief executive Rory Matthews said.

Mr. Matthews also said that the actual number of mortgage applications in the 18-25 age groups has risen by as much as 63 per cent since October 2008. This was based on having analysed this type of loan product for over five years

First time home buyers have a lot of incentives to look at making purchase, including record low variable rates of interest whilst the government grant they receive has doubled to $14,000. It is therefore not surprising to see that the level of interest first time buyers are showing in the property market has increased.

The firm believes there has been an improvement in the quality of credit applicants, which “is a positive sign for the economy’s growth and reduction of bad debt”.

Veda said the number of people applying for new credit cards, personal loans and mortgages with negative information recorded on their risk profile had declined this year.

“Many people who have applied for credit in 2009 have had no prior adverse information on their credit files, which underpins the increase in first-home owner applications being new to the credit market,” it said.

The company also added that default rates for credit card and personal loans had risen gradually in the first quarter of the year, with March recording the highest year-on-year monthly increase.

“This is because defaults generally take three to six months to be recorded on your credit file. This may be indicative of a Christmas spending-spree hangover as Australians struggle to repay debts incurred over the Christmas last year.” Mr. Mathews said.

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