Consumer credit levels off
Personal consumer credit applications have remained flat in the first half of 2008, with an increase of only 0.5 per cent for personal loan and credit card enquiries from the previous year.
Personal loan account enquiries have had the largest quarterly decrease in five years, falling by 6.3 per cent in the second quarter of 2008. Personal loan applications also decreased in the past quarter, with 50,000 fewer enquiries compared with the same quarter in 2007.
However, credit card enquiries grew by 7.9 per cent in the April to June quarter compared with the same period in 2007.
Rory Matthews, the chief executive officer of Veda Advantage, which released the data, said the higher cost of living, interest rate hikes, the volatile global economy, and a tightening of lending criteria by banks caused the credit demand to level off.
“Combined credit card and personal loan applications are on par with this time last year. This is most likely a combination of consumers feeling the pinch of higher interest rates and a general increase in petrol and food prices together with the banks tightening the criteria when considering applications for a credit card or personal loan,” Matthews said.
“We are seeing the majority of Australians favouring credit cards over personal loans at a time when the dollar amount of defaults is at its highest level ever.”
Recommended for you
Digital advice tools are on the rise, but licensees will need to ensure they still meet adviser obligations or potentially risk a class action if clients lose money from a rogue algorithm.
Shaw and Partners has merged with Sydney wealth manager Kennedy Partners Wealth, while Ord Minnett has hired a private wealth adviser from Morgan Stanley.
Australian investors are more confident than their APAC peers in reaching their financial goals and are targeting annual gains of more than 10 per cent, according to Fidelity International.
Zenith Investment Partners has lost its head of portfolio solutions Steven Tang after 17 years with the firm, the latest in a series of senior exits from the research house.
