As predicted last week, consumer credit demand continued its upward trajectory in Q3 2021, supported Equifax’s latest Quarterly Consumer Credit Demand Index.
The first week of NSW’s reopening saw a rising demand for auto loans at 33%, mortgages at 15% and personal loans at 10% compared to the week prior spent in lockdown. However, the demand for consumer credit still has a long way to go before catching up to its pre-pandemic level.
“With international travel soon to reopen, we can expect to see consumer credit demand grow, specifically the use of credit cards to pay for people’s overseas holidays,” said Kevin James, general manager advisory and solutions at Equifax. “It should also hasten Australia’s economic recovery that we’re moving into a quarter that traditionally sees higher spending with Christmas approaching.”
Equifax also revealed that overall consumer credit applications went up 12.8% in the September quarter compared to the same quarter in 2020 – the uptick driven by the strong performance of BNPL, mortgage and personal loan applications.
In fact, demand for mortgage and BNPL have even surpassed its pre-pandemic levels, with mortgage enquiries up 30.2% and BNPL up 14% compared to Q3 2019. However, NSW’s reopening shows otherwise, with a 12% decline in BNPL demand.
Equifax claimed this dip is temporary as “consumers settle back to in-store shopping.”
“Mortgage and BNPL demand have remained strong in and out of lockdowns, but their gains
haven’t been enough to offset the drop in other categories of credit,” James said. “Now that Australia is reopening, we can expect to see credit cards, auto loans and personal loans playing catch up.”
All states except NSW and ACT saw an increased demand for personal loans as enquiries approached the pre-pandemic level, with the highest recorded in Victoria and Tasmania.
Meanwhile, auto loan demand has declined 4.5% across NSW and ACT from the prolonged lockdowns but is expected to recover quickly once restrictions ease.
