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Australian borrowers were more likely to apply for a home loan than any other type of financing during the September quarter, according to the latest market report from Equifax.
Mortgage demand remained robust during the third quarter of the year, with home loan applications rising by 16.3% from the year before, bucking the overall downtrend in consumer credit demand which dropped by 29.6% over the quarter.
The decline in overall credit demand was driven by the substantial drop in the appetite for personal loans and the continued downtrend in credit card financing, largely driven by the COVID-19 lockdown in Victoria.
However, even in Victoria, local demand for home financing remained elevated – growing by 1.3% during the quarter.
In fact, all states and territories reported growth in mortgage application volume during the quarter. Western Australia led the pack with a 48.3% upturn in mortgage applications, followed by the ACT, up by 31.6%.
According to the report, the growth in mortgage demand could indicate further strengthening in home buyer activity over the next quarter.
Kevin James, general manager for advisory and solutions at Equifax, explained that government stimulus and support measures such as the JobKeeper payments have helped cushion the economic toll of the COVID-19 pandemic, especially for consumers who would otherwise rely on credit.
"This is particularly evident when looking at the volume of personal loan applications, which have dropped by around 30% for two consecutive quarters,” James said.
“As government stimulus starts to pull back, we anticipate personal loans may experience a revival, particularly among sub-prime borrowers who may not be eligible for other kinds of financing.”
The table below shows the growth in each financing segment during the quarter across all states and territories:
