A man entering his credit card details into an online page. Photo: Unsplash/ Rupixen
Demand for consumer credit is flattening and arrears are generally trending down, except for personal loans.
Credit bureau Equifax said demand for credit dropped 1.1 percent in September on a year ago with home loans up 9 percent and credit cards down 2.5 percent.
Head of solutions Nick Foster said people are being more careful about taking on debt by shopping around for better mortgage rates and cutting back on spending.
"Open mortgage accounts have trended down, despite the fact there's more inquiries. So, it's indicating that people are really either refixing because they're either rolling off higher interest rates or shopping around for lower interest rates.
"Home loan delinquencies, they've flattened out. 0.3 percent of home loans now are in late-stage arrears, so that's over 90 days past due."
He said demand for personal loans is down 7 percent year on year, particularly for 18 to 35 year olds, but arrears are up the same amount.
"18 to 25 year olds are down 16 percent year on year, that's in terms of their inquiries, and for 26 to 35 year olds under down nearly 12 percent year on year. So that just says those younger people who either might be affected by not being able to be employed or have been made unemployed recently, the demand from those cohorts has really dropped.
"Delinquencies for personal loans have actually increased year on year... So, it's probably those folks who are just, you know really shopping around for personal loans and need them to basically stay afloat. "
Foster said with arrears down in every area except personal loans it paints a positive picture on credit but it still early days in what may be signs of recovery.
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