Figures from data company Equifax have revealed that mortgage demand (which includes loans for new properties and refinancing) continued to trend upward, with home loan applications for the December 2020 quarter up 19.3 per cent from a year ago.
Western Australia recorded the highest growth in demand at 50.9 per cent over the December quarter, which Equifax attributed to improved consumer sentiment, government stimulus for first home buyers (FHB), and a more positive outlook for the mining industry.
There was an increase in mortgage applications across Australia in the December 2020 quarter compared with the previous year, with Equifax data showing a 33.3 per cent increase in the Northern Territory, a 28.2 per cent rise in Queensland, a 26.6 per cent rise in the ACT, a 22.6 per cent increase in South Australia, and a 16.8 per cent increase in Tasmania.
Growth in the largest real estate markets was not as pronounced, with figures showing that there was a 16.4 per cent rise in NSW, and a 9 per cent rise in Victoria, during a period when lockdown restriction had gradually eased last year.
Commenting on the demand for mortgages and the spike in applications, Equifax general manager advisory and solutions Kevin James said: “Demand for mortgages has now experienced growth for the sixth consecutive quarter, driven by low interest rates, stimulus for first home buyers, and the HomeBuilder program, as well as Aussies returning home.”
According to Equifax, historically, movements in its mortgage application demand data have led changes in house prices by around six to nine months.
On the other hand, unsecured consumer credit demand continued to decline in the December quarter, with overall applications down 21.9 per cent compared with last year, according to Equifax figures.
The data and analytics company has released the figures on consumer credit demand in its Quarterly Consumer Credit Demand Index (December 2020). Mortgage applications do not form a part of the index but is a good indicator of home buyer demand and housing turnover, Equifax said.
The index has shown that while consumer credit demand has continued to decline, there have been positive signs that the rate of decline is slowing compared to the prior quarters of 2020.
The fall in demand was largely driven by the continued decline in credit cards (31.7 per cent) and personal loans (28.1 per cent).
The decline in demand for ‘buy now, pay later’ applications was relatively flat, falling by 1.5 per cent in the December quarter compared with the previous year following two consecutive quarters of decline, according to Equifax.
The figures have also shown that the demand for auto loans declined by 2.8 per cent in the December 2020 quarter, with the Tasmania leading the slump (15.5 per cent), followed by Victoria (11.7 per cent).
Speaking about the figures, Mr James said: “Despite the decline in overall credit demand year-on-year, we have seen some steady growth from the September quarter, which is a positive sign following the more extensive COVID-19 lockdowns.
“This has been driven by improvement in auto lending in many states, as well as personal loan applications. Across all states, the market showed strong resilience, even in Victoria which was affected by the second wave of COVID-19, with numbers in the last quarter of 2020 improving considerably.”
Equifax’s September quarter data had shown that the demand for personal loans and auto finance in Victoria had plummeted by more than 40 per cent as the state was forced into the second lockdown by that stage to curtail the spread of the coronavirus.
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Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.