Australians have begun switching mortgage forms in favour of credit cards, as well as personal loan applications. As a result, customer credit demand increased by 9.7 percent in December 2015. This change is quite significant if we were to compare it to the numbers recorded the year before.

In the third quarter, however, credit card applications increased by up to 7.5 percent, previously being established at 1.7 percent. At the same time, personal online loans requests reached 11.9 percent in December.

Veda’s opinion on the increase of online loans

All this information was recorded in the Veda Quarterly Consumer Credit Demand Index. The results obtained in the former quarter were positive, in spite of an existing construction decline. This alteration can be linked with a dominating retail sector that is driven by minimum interest rates, as well as a promising job market and growing consumer sentiments.

Veda’s General Manager of Consumer Risk, Angus Luffman, made an interesting statement on the matter. Auto finance applications have also experienced an unexpected boom. More precisely, car sales have grown by an average of 6.0 percent over the entire year, till November 2015. This particular aspect is connected with the increase in personal online loans applications.

Luffman indicated another significant aspect. The growth of personal online loans applications is linked with the existence of alternative lenders. However, this raises the question of the quality of the applicants. And the truth is that, on an average, the greater majority of Australians with non-traditional finance represents a younger segment of the population.

It might be too soon to make any statement on the subject, but Luffman anticipates that in case this trend grows in popularity, alternative lenders will become the first option for the greater majority of borrowers.

Diminished demand for mortgages

In spite of the evident signs showing that customer confidence is slightly improving, the number of mortgage applications is much smaller. In December, it reached 2.9 percent, which is a significant decrease.

Veda’s mortgage application information shows that this reduction was clearly portrayed in New South Wales in particular. At the same time, this decline was depicted in all jurisdictions, apart from the Northern Territory.

The property demand is slightly decreasing, along with the auction clearing rates, and the house prices. Typically, the diminished demand is also related to cooling conditions of the housing market in the year we have just entered. Luffman also suggests that this aspect implies less support concerning retail spending in the housing market.