Mortgage applications decline 16.1%: Equifax

According to the latest Equifax Quarterly Consumer Credit Demand Index (December 2022), mortgage applications fell 16.1 per cent on the previous corresponding period (pcp). Additionally, mortgage demand fell in all states in Q4, with ACT and NSW taking the lead.

Demand in ACT was down 21.8 per cent, closely followed by NSW at 19.6 per cent. Mortgage demand in Victoria fell by 16.1 per cent, Queensland by 15.8 per cent, Tasmania by 14.3 per cent, Northern Territory by 9.8 per cent, South Australia by 9.4 per cent, and Western Australia fell by 7.6 per cent.

However, according to the index, mortgage balances are increasing, with mortgage limits rising by 5.5 per cent between December 2021 and December 2022, which are up 15 per cent on the same period in 2020.

Furthermore, Equifax’s index revealed that overall consumer credit applications increased 5.1 per cent on pcp. The research indicated that credit card demand was the primary force behind the overall growth, which was up 21.3 per cent on pcp.

Personal loan applications also increased by 4.8 per cent on the December quarter 2021, while buy now, pay later (BNPL) and auto loan applications declined 0.2 per cent and 14.4 per cent, respectively.

General manager advisory and solutions at Equifax, Kevin James, said the increase seen in credit card demands during this period can be attributed to travel and retail expenses during the festive season but could also reflect the number of consumers turning to credit to help alleviate cost-of-living pressures.

“To date we haven’t seen an increase in credit card arrears but, as household savings fall and the cost of living remains high, we could see financial pressure on consumers reflected in credit card usage and defaults in the coming quarters,” Mr James said.

Mr James further stated that personal loan arrears are increasing alongside demand.

“We’re seeing an increase in arrears (<90 days past due) compared to the same quarter in both 2021 and 2020. Internationally, unsecured credit arrears are also growing in markets like the UK, US, and Canada — markets that raised interest rates before we did,” Mr James said.

“In Australia, 21 per cent of personal loan customers also have mortgage commitments.

“The lag between arrears in personal loans and mortgages is usually about six months, so our current data could be an indicator of an increase in mortgage arrears to come.”

[RELATED: Savings buffers ‘exhausted’, Equifax warns]

Adrian Suljanovic is a journalist at Broker Daily with more than two years experience reporting on all facets of the third party distribution channel.

Adrian has written for a range of business and finance titles including IFA, Investor Daily and Lawyer’s Weekly before joining the mortgages team in 2022.

He graduated from the University of Wollongong in 2021 gaining a Bachelor of Communication & Media with a major in Digital & Social Media.

E-mail Adrian at: This email address is being protected from spambots. You need JavaScript enabled to view it.