National Credit card demand slows
Demand for credit cards has fallen for the first time in more than three years amid a slowing housing market, weak wages growth and subdued retail sales.
Credit information provider Veda says consumers are wary of taking on additional discretionary credit.
Consumer credit card applications in the June quarter of 2016 were down 0.5 per cent from a year earlier, the first fall in credit card applications since the March quarter of 2013.
Veda's Quarterly Consumer Credit Demand Index also showed growth in personal loan applications slowed in the June quarter, rising by only 4.7 per cent.
Overall consumer credit applications rose two per cent.
Veda's general manager of consumer risk, Angus Luffman, said the trend of lower growth in credit demand was continuing, except for demand for car loans which showed good year-on-year growth.
'Turnover for household goods, which are often big ticket items financed by credit, slowed significantly in recent months,' he said.
'The subdued outlook for the housing market suggests that the support provided by the housing market for retail spending will also decline.'
Veda also pointed to the Reserve Bank of Australia's data on credit cards that showed consumers were using cards more as a payment tool than as a credit instrument beyond interest-free periods.
Also, the average transaction size for credit cards was now back at 2004 levels.
Credit card repayments continue to exceed the average value of transactions by a widening margin.
Veda also said applications for mortgages fell 3.2 per cent in the June quarter compared to a year earlier - the fourth consecutive quarter showing a slowdown or drop.
'Regulatory-driven changes to investor mortgages implemented in the middle of last year have contributed to the cooling of mortgage demand over the past 12 months,' Mr Luffman said.
Mortgage applications in the June quarter fell in all states except the ACT and Victoria, with the sharpest decline in the Northern Territory, followed by Western Australia.