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NZERS BACK BUYING ON CREDIT WITH BABY BOOMERS LEADING THE WAY
Consumers are back buying on credit but post the Global Financial Crisis they are choosy about the type of credit they are prepared to take on.
Latest statistics from credit bureau Veda shows consumer activity in the credit market continuing to strengthen after several years of decline.
Veda Managing Director John Roberts says the statistics reinforce economy-wide indications that the country has reached the base of the credit demand cycle and is now trending incrementally upwards.
"What we are seeing is people slowly returning to credit for their purchases but the statistics show people are cautious and not over-reaching themselves," Mr Roberts says.
Hire purchase and credit card inquiries are up thanks in large part to Baby Boomers. In contrast it is Gen Y that is keeping mortgage inquiry levels up showing that nesters believe it is a good time to be buying.
Mr Roberts says the statistics highlight interesting behaviour.
"Consumers have turned away from personal loans. They appear to have chosen to consolidate debt to minimise their personal risk exposure in the aftermath of the Global Financial Crisis."
"Commercial credit inquiries are continuing to trend down. This indicates that SMEs are still choosing to use personal credit lines rather than securing debt against the registered entity."
While the bureau statistics show a substantial fall in consumer defaults, commercial defaults are continuing to rise.
Historically the commercial market lags behind the consumer market by 18 months suggesting that commercial defaults will continue to rise for another six to nine months.
Statistical highlights for the nine months January to September 2011 compared with the same period last year:
- General credit inquiries up 3.49 percent
- Hire purchase inquiries up 3.19 percent
- Personal loan inquiries down 10.23 percent
- Credit card inquiries up 12.94 percent
- Mortgage inquiries up 11.19 percent (Gen Y 23.84 percent)
Mortgage inquiries September only compared with September 2010 up 36.61 percent for Gen Y.