Interesting trends emerge in the credit demand cycle
New Zealand’s leading credit bureau seeing some interesting trends emerge in the credit demand cycle
Auckland, 10 April 2014 - New Zealand’s
leading credit bureau, Veda, has reported some interesting
movements in the credit demand cycle for the first quarter
• Personal loans are up 12.5% on the same quarter in 2013
• Hire Purchase applications have risen by 4.3% for the March quarter compared to 2013
• Credit Card applications were up 4.1% on March quarter for 2013
• Housing applications down 6.4% on March quarter for 2013
John Roberts, Veda’s Managing Director, believes there is not only a strong recovery in the credit demand cycle with some of the strongest increases seen since the global financial credit crisis, there are also some emerging trends that will impact on the credit quality of New Zealanders as the economy grows through this economic recovery cycle.
Housing: Mortgage enquiries have seen another sharp decline for the second consequtive quarter since the Reserve Bank introduced new Loan To Value ratios in 2013. The biggest demographic impact has been Gen Y’s who are traditionally first home buyers. The other demographic affected is the Gen X’s who are down 13.5% for the same period last year. Interestingly these two groups are showing growth in personal loans.
Personal Lending: Personal loan applications grew by 12.5% in the March quarter. Generationally the largest growth was the inverse of the housing trend, with Gen Y growing at 14.1%. Anecdotal evidence suggests that this generation now feels that they are locked out of the housing market and are destined to be renters for the foreseeable future. Based on this, they are in the market upgrading cars and buying other consumer durables to enhance a lifestyle that home ownership would normally offer.
Gen X on the other hand has grown by 12.6% in personal lending. Analysis of credit applications following a mortgage application would suggest that a percentage of this group are using unsecured loans to assist funding the required deposit for home ownership with the new loan to equity rules. This could have an impact on credit fragility. If there are any significant adjustments in interest rates, as predicted by most financial commentators, over the next couple of years then rate rises on more costly unsecured finance could place stress on family finances.
Veda is a data analytics company and the leading provider of credit information and analysis in Australia and New Zealand. From its core credit bureau business established in 1967, Veda has expanded to deliver a suite of credit and other analytical products targeted to specific industry segments.
Veda is built on the largest, most comprehensive and current data source in Australia and New Zealand with information on over 20 million credit active people and 5.7 million commercial entities. The breadth and depth of our data, and the knowledge it delivers help customers take a proactive and informed approach in making decisions.
Veda’s customers use data intelligence provided by Veda to make decisions on credit risk, verify identity and employee background, reduce identity theft and fraud, and undertake digital marketing strategies. www.veda.co.nz
The Veda Bureau Insights measure the volume of credit card and personal loan applications that go through the Veda Consumer Credit Bureau by financial services credit providers in New Zealand. Credit applications represent an intention by consumers to acquire credit and in turn spend; therefore the index is a lead indicator.