Mining states lead rise in mortgage inquiries, but NSW falls: Veda

Mortgage enquiries increased for the first time in eight quarters, according to the latest Consumer Credit Demand Index from consumer credit agency Veda, led by strong gains in Queensland, WA and the Northern Territory.

During the March 2012 quarter, mortgage inquiries increased by 0.2% to be up 1.5% year on year.

There were solid increases in Queensland (up 4.4% for the quarter, 10.2% year-on-year), NT (up 4.7% for the quarter, 9.7% year-on-year) and Western Australia (up 7.6% for the quarter, 6.6% year-on-year) indicating that mortgage enquiries may be stabilising.

Mortgage enquiries in NSW dropped sharply (-7.6%) in the March quarter, the only state or territory to record a year-on-year quarterly decline, “a reflection of the expiration of stamp duty exemptions in NSW at the end of last year which resulted in a pull forward of first home buyer demand followed by a drop in the first quarter of 2012”.

During the past 12 months NSW mortgage enquiries are down 0.7%.;

Victorian mortgage enquiries increased by 2.3% over the quarter, but are still down 2% year on year.

South Australian enquiries increased by 3.1% over the quarter but are down 3.2% for the year.

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"Turning points in mortgage enquiries usually occur one to three quarters ahead of turning points in house prices, an early warning sign which could indicate that after a continued decline, mortgage enquiries may have bottomed out,” says Angus Luffman, head of consumer risk at Veda. 

“Veda mortgage enquiries are closely related to the number of housing finance approvals so this is a trend to watch, particularly if you are hoping for a future pick-up in house prices. 

"In terms of state by state mortgage activity we are seeing different trends play out with NSW mortgage enquiries being affected by the expiration of stamp duty and Queenslanders starting to bounce back after a challenging year," he adds. 

Credit card applications declined sharply in SA (-12%), NSW (-11.3%) and Victoria (-8.8%) over the last year, while the decline is less severe in Queensland (-1.6%) and WA (-4.2%).  In part, the weakness in credit card applications reflects the rise in the use of debit cards and the introduction of responsible lending laws in 2011, which has led to more steps being added to credit card application processes.  

Overall credit demand rose 1.2% over the quarter with credit card applications up 2.7% and personal loans down 0.3%. 

Compiled by Veda since 2004, the Consumer Credit Demand Index is a quarterly analysis of changes in consumer demand for credit cards, personal loans and mortgages across Australia.

Personal loan applications decreased 1.4% year on year, with reduced demand in all states and territories in the March quarter with the exception of WA and ACT. In sharp contrast to other states, personal loan applications surged in WA (+8.3%) year on year while weakness in personal loan applications was particularly evident in Tasmania(-7%), NSW (-4.4%) and SA (-3.4%).

"Australian households have spent the post-GFC period firmly in saving rather than spending mode and the results show that consumers are still cautious about taking on credit, " says Luffman.

"While applications for credit cards and personal loans have both declined, the reduction in card applications is far greater, showing that they are increasingly falling out of favour with consumers as households continue to focus on saving.  However, the results indicate that Australia's two-speed economy is still in effect with consumer credit demand significantly stronger in the mining states," Luffman adds.

Compiled by Veda since 2004, the Consumer Credit Demand Index is a quarterly analysis of changes in consumer demand for credit cards, personal loans and mortgages across Australia.


Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer


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