Households driven to borrow more

There are some signs of a response in the level of credit being demanded by households in the latest monthly data from the Australian Bureau of Statistics that could point to a stronger recovery than other, partial, measures of demand indicate.

Personal loans increased for the fourth successive month, CommSec noted in an analysis of the ABS data. These rose by 1.9 per cent in June, after rising by 0.6 per cent in May.

CommSec said that loans taken out to buy new cars in June 2012 were 45 per cent higher than a year ago and at an all-time high.

Savanth Sebastian, economist at CommSec, wrote in a commentary that "after a lack of borrowing over the past year, Australian consumers and businesses seem to have been tempted by the lower rates on offer."

"The low interest rates have altered perceptions on borrowing," Sebastian wrote.

The periodic credit monitor produced by Veda Advantage picked up most of this trend. Veda said last month that the number of inquiries about consumer credit recorded through its credit bureau had increased by 0.1 per cent over the year to June 2012. This is up from a 4.5 per cent decrease in the year to March 2012.

Veda said the rise in the demand for car loans had increased 16 per cent over a year, which is in line with record sales of new cars.

A wider view of personal debt, prepared by MWE Consultants, takes a more downbeat view of industry trends.

Mike Ebstein, principal of MWE, wrote in an MWE monthly report that total personal debt held by households fell marginally over the June 2012 quarter, and fell by two per cent over the year.

MWE derives its data from Reserve Bank of Australia's measures of household debt and is based on quarterly averages.

New lending commitments across all categories - housing, personal, commercial and leasing finance - increased by 1.9 per cent in June, after falling by 7.3 per cent in May, on a seasonally adjusted basis, CommSec said. Lending is up 2.6 per cent on a year ago.