Latest NewsDemand for Mortgages RisesMonday, 12 September 2016

AAP

More Australians are taking out mortgages as low interest rates and government handouts make owning a home more feasible, a new survey from a leading credit provider says.

But fewer applications for credit cards and personal loans are being made, indicating consumers are responding conservatively to the economic slowdown.

Veda Advantage's survey of consumer credit demand showed a 28 per cent rise in applications for home loans in the year to June 30.

Enquiries for credit cards and personal loans fell by 20 per cent in the June quarter compared to the corresponding period in 2008.

"Veda's measure of mortgage inquiry growth and volumes for the June quarter, 2009, is higher than at any time in the past five years," Mr Evans said.

"This is continuing high level of demand is a response to high levels of housing affordability, low interest rates and the federal government's first home buyers' grant."

The Reserve Bank of Australia (RBA) has lowered the overnight cash rate by 4.25 percentage points to a 49-year-low of three per cent between September 2008 and April.

In mid-October, the federal government doubled the first home owners grant to $14,000 for existing dwellings and tripled it to $21,000 for newly built homes.

Demand for home loans have increased every month between October and June this year, data from the Australian Bureau of Statistics showed.

Conversely, Mr Evans said enquiries for consumer credit such as personal loans and credit cards continued to slide.

Applications for personal loans have fallen for seven consecutive quarters and were 17 per cent lower in the June quarter than the corresponding period in 2008.

Credit card enquiries fell by 22 per cent in the second quarter compared to the April-June period in 2008, Veda data showed.

Enquiries for credit cards declined by 12.4 per cent in the June quarter, their biggest quarterly fall in the five years Veda have collected the data.

"The message is that this continued softening in demand for personal loans and credit cards by Australians shows people are taking a conservative outlook," Mr Evans said.

"I don't think it is a lack of confidence in the market place, it is more around them being conservative in signing up for more debt."

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