New Zealanders buying back on credit

Veda data shows Consumer credit demand comeback

The credit demand cycle is showing further signs of a comeback with the latest data from credit bureau Veda highlighting an increased demand for credit cards and mortgages.

Veda Managing Director John Roberts says "this increasing demand for credit is in line with a gradual improvement in economic conditions here.  When people seek credit from a bank or finance company their credit record is checked and it is this data, which provides an insight into the demand for credit by New Zealanders month by month."

Overall consumer inquiries were up 3.73 percent annualised for 2011 and up 5.96 percent on the same month (October) last year.  As a comparison, overall inquiries for October 2010 were down 14.12 percent compared to the same month 2009.

Veda's October data shows credit card applications have increased by 6.75 percent with Baby Boomers leading that demand on 9.96 percent.

Mortgage inquiries were up 23.35 percent for the month of October compared with the previous October with Gen Y spiking at 36.43 percent.  This does not necessarily suggest a significant step up in property sales.  Veda believes the figures reflect people rate shopping as their loans come off fixed term.

Demand for hire purchase and personal loans continue to fall.

The numbers of individuals and businesses defaulting on bills is down substantially. 

For individuals, defaults in October were down 25.15 percent compared with the same month last year.  This may reflect the continuing effect of statutory and other non-credit debt not now being able to be loaded as a debt on credit reports.  It also reflects the lower levels of credit provided to consumers.

The number of commercial defaults fell by 19.83 percent in October 2011 compared with the previous October.

Mr Roberts says "the data tells us that New Zealanders are cautiously moving on from the Global Financial Crisis but they remain wary knowing that the global financial shakedown is continuing in Europe."

"We are continuing to witness a sharp change in consumer attitude towards credit compared with pre-GFC appetites."

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