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Latest consumer credit data from Equifax to Sept 2023

Despite uncertain market conditions consumer credit demand rose slightly in the September quarter of 2023, according to the latest Equifax Quarterly Consumer Credit Demand Index (September 2023). The September quarter saw further stabilisation of retail credit demand, with solid growth in July and August, tempering through September in the run up to the election.

Released today by Equifax New Zealand, the global data, analytics and technology company and leading provider of credit information and analysis, the index measures the volume of enquiries for retail credit products, including credit cards, personal loans, and home loans.

Unsecured credit demand was the main growth driver, up +9.4% year-on-year, for the September quarter, continuing the upward trend of recent quarters. The growth in unsecured credit was driven by personal loan demand (up +16.7% vs the same period in 2022). The growth in credit cards slowed for the first time in four quarters (relatively flat at -1.2% vs the same period in 2022). Mortgage demand was also relatively flat, down -2.7% in the September 2023 quarter versus the same quarter of 2022.

Equifax Managing Director, Angus Luffman says the continued buoyancy in overall credit demand is a positive sign amidst current market conditions. “This is the second consecutive quarter of positive credit demand following the return to growth in the June quarter. Whilst demand is still not quite at pre-pandemic levels we are seeing underlying strength right across the retail credit product landscape.”

“Demand for personal loan products continues to increase, led by Kiwis aged 31-45 and is fairly broad based across the regions. Personal loans are generally used to fund larger purchases, such as motor vehicles and can be indicative of increasing confidence of consumers to be able to meet larger payment obligations,” says Luffman

Demand for personal loans increased across the regions in Q2 2023 with Taranaki (+25.6%) and Otago (+23.6%) leading the way, with Manawatu-Wanganui (+21.7%), Hawke’s Bay (+20.0%) also experiencing strong demand. Southland (-1.0%) was the only exception with relatively flat demand.

Regions with strong credit card demand for the quarter include Tasman (+16.1%), Marlborough (+12.6%), Taranaki (+12.1%) and Nelson (10.5%). West Coast (-12.1%) and Southland (-11.4%) had notably weak demand against the other regions.

Mortgage demand fell for the ninth consecutive quarter, however the decline has slowed for the second quarter (-2.7% vs the same period last year), and mortgage demand is on par with pre-pandemic levels. The largest declines were recorded in Nelson (-18.6%), Tasman (-14.4%) and Southland (-11.2%), with modest improvements in demand across Otago (+0.7%) and Hawkes Bay (+0.6%).

“Mortgage demand, measured by credit enquiries, is a lead indicator of housing turnover and, in turn, price movements. With inflation easing and interest rates on hold since May 2023, the demand for mortgages has continued to stabilise, maintaining the improvement from the June quarter, after the historic lows observed at the start of the year. With increased annual net migration and continued low unemployment, the prospects for a return to mortgage demand growth look solid as we head into 2024,” adds Luffman.


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