Personal credit demand (credit card and personal loan enquires) fell by 14% in the July to September quarter of 2009 compared with the same quarter in 2008 but mortgage inquiries were the subject of record growth, according to the latest research from information service provider Veda Advantage.

Mortgage applications surged 32% in the July to September quarter of 2009 compared with the same period last year, reflecting the highest quarterly increase in mortgage applications in the past five years of Veda Advantage records.

Figure 1: state-by-state breakdown of mortgage enquiry increases comparing the July to September quarter in 2009 to 2008.

Personal credit

Credit card and personal loan enquiries have continued to decrease year-on-year across every quarter of 2009, indicating consumers remain cautious about taking on more debt. The 14% decrease in consumer credit demand in the recent quarter followed a 20% decrease in personal credit enquiry levels in the April to June quarter of 2009. The January to March quarter of 2009 fell by 13% when compared to the same quarter in 2008.

Credit card enquiries decreased by 18% in the July to September quarter year-on-year. Applications for personal loans decreased for the eighth consecutive quarter, falling by 10% in the July to September quarter compared with the same quarter in 2008.

Russell Evans, Veda Advantage General Manager Market and Product Development, said some continuing caution about new credit, resilience in household saving and the rising popularity of debit cards are likely to be the principle factors behind the fall in credit demand.

“Whilst there were more than a million enquiries for credit cards and personal loans in quarter three of the 2009 calendar year, this is a significant decrease when compared to the same quarter in 2008 and clearly reflects the continuing impact of the global financial crisis,” he advised. “However, the trend in consumer credit demand over the past 18 months shows the decline in credit enquiries is slowing.”

Veda’s Australian Debt Study, commissioned by Galaxy Research, shows that new credit demand remains healthy, with one in 10 (9%) Australians indicating they are likely to apply for new credit over the next six months. The study found amongst those who intend to apply for credit, the most common reason cited is for property purchase (41%).

“The record number of mortgage enquiries is one sign the economy is recovering with the property market currently experiencing marked activity,” Mr Evans said.