Mortgage applications up 13.1%: Equifax

The Equifax quarterly consumer credit demand index has reported credit demand has begun to climb, as NSW and Victoria bounce back from lockdown restrictions.

The index recorded a 12.8 per cent rise in overall consumer credit applications in the September quarter, from the previous corresponding period in 2020.

The yearly uptick in consumer demand had been driven by demand for mortgages, personal loans and buy now, pay later (BNPL) services.

Mortgage applications specifically were up by 13.1 per cent year-on-year and compared to the same period in 2019 (pre-COVID), they were up by 30.2 per cent.

The Northern Territory led the pack, with applications up by 23.3 per cent year-on-year. Victoria followed (up 18.5 per cent), alongside Queensland (up 17 per cent), NSW (up 13.8 per cent), the ACT (up 9.3 per cent), and South Australia (up 1 per cent).

Western Australia and Tasmania stayed somewhat flat, with application numbers up by 0.6 per cent and slipping by 0.3 per cent respectively.

Considering the first week out of lockdown for NSW, (11-16 October), mortgage applications were up by 9 per cent year-on-year – compared to 10 per cent for the rest of Australia.

The state recorded a 15 per cent rise in mortgage applications from the week before, while the rest of the country saw a 12 per cent weekly increase.

However, overall consumer credit demand is still 20.8 per cent below pre-COVID levels (Q3 2019).

Kevin James, general manager advisory and solutions at Equifax commented that despite mortgage and buy now, pay later (BNPL) demand remaining strong through lockdowns, their gains had not been enough to offset other credit categories.

“Now that Australia is reopening, we can expect to see credit cards, auto loans and personal loans playing catch up,” Mr James said.

Personal loan applications grew by 20.3 per cent year-on-year, while BNPL applications had the largest increase of any product, at 31.4 per cent.

However, the demand for personal loans trended downwards in the ACT (-9.1 per cent) and in NSW (down by 6.7 per cent). Victoria had seen the highest growth (demand up 43.1 per cent year-on-year), despite lockdown.

Meanwhile, credit card applications were flat, slightly decreasing by 0.3 per cent.

Auto loan applications fell by 4.5 per cent, although inquiries rose by 33 per cent during the first week out of lockdown in NSW.

“It should also hasten Australia’s economic recovery that we’re moving into a quarter that traditionally sees higher spending with Christmas approaching,” Mr James said.

[Related: Sydney’s housing affordability could hit lowest in a decade: Moody’s]