Mortgage Applications Up 23.5% in March Quarter: Equifax

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Demand for home loans rose 23.5 percent in the first three months of 2021, new Equifax data shows.

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According to the data analytics and credit reporting company, while applications for consumer personal credit (credit cards and personal loans) have continued to fall, demand for mortgages, auto loans, and buy now, pay later (BNPL) applications is growing rapidly year on year. .

After assessing mortgage applications from financial services lenders across Australia, Equifax found that home loan demand grew 23.5 percent compared to the March 2020 quarter, with every state and territory growing.

While Northern Territory led demand up 50.5 percent, Equifax noted that volumes in the state were generally low.

After NT, Western Australia was the state with the highest increase in mortgage applications (compared to the quarter ended March 2020), at 48.6 percent.

This was followed by Queensland (33.4 percent), ACT (31.5 percent) and SA (25.9 percent).

East coast states continued to see an acceleration in homebuyer activity, with Victoria showing a recovery from a subdued last quarter in lockdown.

NSW applications were up 24.5 percent, Tasmania was up 18.4 percent, while Victoria was up 15.2 percent.

Kevin James, Equifax’s general manager, advice and solutions, commented, “Ultra-low interest rates lure more people into the market, but also provide an incentive for homeowners to refinance in their quest for better interest rates.”

He added: “The market is showing a shift towards asset-based lending, with mortgages and auto loans proving to be more popular than liabilities such as credit cards and personal loans.”

The comments come as Equifax is releasing its Quarterly Consumer Credit Demand Index for March 2021, which measures the volume of credit card, personal loan, BNPL and auto loan applications submitted by the Equifax Consumer Credit Bureau by financial services lenders in Australia. .

According to the index, total applications for consumer credit fell by about 14.0 percent compared to the same quarter last year.

The decline was led by a 28.9 percent drop in credit card applications, while personal loan applications fell 14.5%.

The data company noted that while the decline in demand for credit cards and personal loans had “softened”, it “wasn’t enough to smooth out their downward trajectory.”

Indeed, the company disclosed that the decline equated to the 12th consecutive quarter in which credit card applications declined (or any quarter for the past four years), and the seventh consecutive quarter in which personal loan applications had declined (or any quarter in the past 2. 3 years).

Victoria registered the lowest demand for credit cards, down 30.9 percent from last year, while the ACT had fewer personal loan applications (25.4 percent less than last year) than anywhere else in Australia.

While demand for credit cards and personal loans remains weak, auto loans and BNPL applications continue to grow.

The Equifax index found there was an increase in both car loans (+3.7 percent) and BNPL applications (+4.0 percent) in the March quarter compared to the same period last year.

For auto loans, NT led the pack with an increase of 23.4 percent (but for a small number of applications), while applications in WA rose by the second highest amount (11.4 percent).

The NT also saw the largest increase in BNPL applications, up 123.5 percent from last year, but again, this was a small number of applications. NSW saw BNPL applications grow 7 percent compared to the March 2020 quarter, coming in second.

Victoria and Tasmania were the only states not to see growth in BNPL applications, but the number of applications was still higher than in the last quarter.

β€œDespite signs that the market may be heading for a recovery from COVID, demand for credit cards continues to decline. The reduced economic activity in Victoria from their second lockdown didn’t help, but ultimately a change in consumer behavior is pushing credit cards out of favor,” James said.

β€œDemand for BNPL continues to come from Generation Y and Generation Z, but there are signs that this cohort has reached saturation. The younger generation – Generation Z – may soon catch up, as they accounted for 26 percent of the total number of applications.

“The lowest proportion remains with the baby boomer generation, not surprising given that many are retired,” he added.

[Related: House prices reached record high in March quarter]

Mortgage Applications Up 23.5% in March Quarter: Equifax

Mortgage Applications Up 23.5% in March Quarter: Equifax

mortgage business

Last updated: April 29, 2021

Published: April 30, 2021

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Annie Kane

Annie Kane is the editor of The Adviser and Mortgage Business.

As well as writing about Australian brokerage, the mortgage market, financial regulation, fintechs and the wider credit landscape, Annie also hosts the Elite Broker and In Focus podcasts and The Adviser Live webcasts.

Contact Annie at: This email address is being protected from spambots. You need JavaScript enabled to view it.

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