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Mortgage demand drops

A fall in mortgage demand has reversed the positive growth recorded in the December 2023 quarter, Equifax has reported. Equifax's Quarterly Consumer Credit Insights – March 2024 report has shown mortgage demand declined 4.5 percent during the first quarter of this year, drawing back the 0.5 percent growth recorded in the previous quarter. The December quarter's lift in mortgage demand marked the first quarter of positive growth since 2021 as the stabilization of interest rates had a positive impact on mortgages. Auto loan demand increased 4.7 percent during the March quarter of 2024 when compared to the same quarter of 2023, while secured credit demand (derived from both mortgages and auto loans) fell 2.8 percent in the March quarter of 2023.

Despite the fall in mortgage demand, average limits and arrears continued to rise in this quarter. These figures come as the Australian Bureau of Statistics (ABS) Lending Indicators data revealed an increase in the value of new loan commitments for total housing of 1.5 percent in February, which followed a drop of 3.9 percent in January. Kevin James, general manager, of advisory and solutions at Equifax, said that the average limit per new mortgage account continued to grow "at a consistent pace of 7 percent year on year – reflecting increasing house prices". "Additionally, we've seen higher mortgage stress this quarter despite stable interest rates; mortgage arrears increased across all categories," James said. "Arrears of 30–89 days past due increased 15 percent year on year, while arrears of 90-plus days past due were up 17 percent."

Meanwhile, unsecured credit demand – made up of credit cards; personal loans; and buy now, pay later (BNPL) – fell 3.5 percent, largely driven by declining demand in personal loans, which fell by 4.6 percent and BNPL (down by 24.7 percent). However, credit card demand grew by 13.2 percent when compared to the same quarter last year, despite the overall drop in demand for unsecured credit. James stated that Australians are reaching out for unsecured credit to "alleviate cost-of-living pressures". "We're also seeing strong growth in credit card limits, up 29 percent year on year, which means consumers are applying for more money on their cards," James added.

At RFS, we are seeing well-intentioned, prequalified clients trying to buy properties however due to a lack of options with low stock just not finding a property that suits.