Consumer credit demand soft

Applications for personal loans fell in the December quarter, suggesting that the sluggish conditions in the consumer credit market are not going to turn around any time soon.

Veda's latest Quarterly Consumer Credit Demand Index shows the number of personal loan applications put through the Veda credit bureau fell 5.8 per cent in the December quarter, compared with the same quarter in 2013. They also fell in the June and September quarters last year.

Veda's general manager of consumer risk, Angus Luffman, said weaker car sales in 2014 was one factor contributing to lower personal loan applications.

Luffman said: "Demand for personal loans is strongly influenced by car sales. Over the 12 months to November car sales fell by 3.8 per cent."

Meanwhile, credit card applications were up by 8.3 per cent (year-on year) during the December quarter.

Luffman said active marketing by credit card issuers last year, offering more attractive balance transfer and introductory purchase deals, had induced consumers to switch card providers or take out new cards.

"Campaign activity drives demand in the credit card market," Luffman said.

But this activity has not led to an increase in credit card balances. The latest Reserve Bank figures show that balances accruing interest on credit and charge cards fell by 1.7 per cent over the 12 months to November.

In aggregate, Veda's Consumer Credit Demand Index was up 0.9 per cent in the December quarter.