Mortgage demand continues to fall, according to latest Equifax data

Data company and credit information provider Equifax has released its Quarterly Consumer Credit Data Index (for the quarter ended June 2022), revealing that consumer demand for mortgages has continued to fall.

According to the data, mortgage demand continued to ease in the last quarter, falling 5.3 per cent when compared to the June 2021 quarter and dropping for the second consecutive quarter.

A decline in mortgage applications was noted in all states except Queensland and South Australia, with NSW accounting for the greatest drop in demand (11.1 per cent) on a year-on-year basis.

After NSW, mortgage demand in ACT was 8.5 per cent down, while Victoria was 6.6 per cent down and Tasmania 6.0 per cent down.

The NT and Western Australia only recorded small declines in home loan application numbers, down 2.2 per cent and 1.9 per cent, respectively.

The drop in mortgage applications comes off the back of an “inflated 2021 housing market”, which was assisted by historically low-interest rates and high savings buffers.

Speaking in May when releasing the March quarter data, Kevin James, general manager advisory and solutions at Equifax, had suggested that the “interest rate rises and uncertainty around what impact this will have on the housing market has started to have a tangible impact on consumer behaviour”, both for prospective new home buyers and existing mortgage holders.

BNPL and credit card apps on the up 

Although mortgage application activity fell in the June quarter, overall consumer credit demand increased.

Demand was up by 10.2 per cent in Q2 2022 when compared to the same period from last year, driven by growth in unsecured credit.

According to Equifax, demand for buy now, pay later (BNPL) has surged, increasing by 42.2 per cent in the June quarter, despite “turbulence in the sector”.

Credit card demand has also rebounded, increasing by 6.0 per cent year-on-year after recording three consecutive quarters of decline, while personal loan demand also grew (up 4.2 per cent compared to last year’s quarter), overtaking pre-COVID levels.

Auto loan applications declined by 15.1 per cent.

Mr James said that the recent increase in credit card demand “may have been influenced by the return of international travel, with many consumers using credit cards to earn points and for overseas spending”.

“As travel continues to increase, we may see further growth in credit card demand going forward,” he said.

However, Equifax also noted that there was an increase in arrears for personal loans, climbing to the “highest levels since the start of the pandemic”.

Mr James suggested that this “could be a sign of greater stress to come”.

“Activity in the personal loan market is often an indicator of future trends in other areas of consumer credit,” he explained.

“We’ve seen this play out in overseas markets. According to research from Equifax from the US, subprime consumer arrears in personal loans were among the first to be impacted by inflationary pressures.”

[RELATED: Mortgage demand sinks for 1st time since 2019]

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.