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Weak consumer confidence and soft income growth have driven a three per cent drop in consumer credit demand, according to Veda.
Veda’s quarterly credit index found a three per cent year-on-year fall in the volume of credit card and personal loan applications during 2013/2014.
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Credit card applications rose 1.6 per cent, however personal loan applications fell 7.1 per cent.
Veda’s general manager of consumer risk, Angus Luffman, said the figures suggest that retail sales in the June quarter were probably soft.
“The federal government’s May Budget took its toll on consumer confidence, while unusually warm weather has sapped autumn and winter sales for clothing retailers,” he said.
“Most fundamentally, income growth has been subdued against the backdrop of weakness in the labour market.”
Veda also reported that mortgage enquiries grew 6.1 per cent during the last financial year.
Mortgage applications are not part of the credit index, but are said to be a good indicator of future activity in homebuyer demand and housing turnover, according to Veda.
“Historically, movements in Veda mortgage demand have tended to lead movements in house prices by around six to nine months,” Veda said.
[Related: Veda warns of sluggish economy]
