NZ consumer credit growth creeping back up

NZ consumer credit growth creeping back up

Feb. 1 (BusinessDesk) – Demand for consumer credit is showing signs of life after a period of household debt consolidation, according both to official figures and to behaviour observed by the country’s largest credit bureau, Veda Advantage.

While lending on mortgages fell month on month in December, the first time such a fall has been recorded since the Reserve Bank started keeping records in mid-1998, there was a $76 million increase in consumer credit between November and December. That was against a slight falling trend for calendar 2010, which saw a 0.7% decline in consumer lending, which was roughly stable at $11.99 billion at Dec. 31.

Meanwhile, Veda Advantage said it was picking up signs of increased demand for consumer credit, which it interprets as indicating some recovery in domestic economic sentiment.

“The credit crunch shocked people and they changed their behaviours quickly, but now we are seeing a renewed but cautious approach to credit,” Veda’s chief executive, John Roberts said in a statement. “People were clearly more active in late 2010 and I expect to see this optimism continue in 2011.”

Veda recorded a 5.7% increase in credit card applications in December 2010 compared the same month a year earlier. Baby boomers (45 years-plus) led the way with a 13.2% increase in applications while Gen Y (30 – 45) applications were still down 7.5%.

“It appears, overall, that we have seen the bottom of the consumer reaction to the credit crunch. New Zealanders are now taking careful steps back into the consumer-credit world,” Roberts said.

While Veda also saw a small increase in applications for mortgages, the RBNZ figures showed mortgage lending was down $50 million from November’s $171 billion total – the first such monthly decline recorded in the decade that figures have been kept.

(BusinessDesk)

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