Auto credit, home loan, BNPL demand on the rise in 2021

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After a horror show in 2020, auto and auto loan applications rebounded in the first few months of this year, new data shows.

Equifax’s latest quarterly Consumer Credit Demand Index for the March 2021 quarter shows auto loan applications increased 3.7% from the previous March quarter in 2020.

This is by far a more positive change from the 15.3% drop recorded by Equifax in September 2020 and the 2.8% quarterly drop in December.

This follows other recent trends showing car sales and purchases recovering, after new car sales posted record monthly declines in the first months of the pandemic.

According to recent data from the Australian Bureau of Statistics (ABS), car spending soared 31.8% to end the year, the biggest increase on record.

Data from Equifax shows that the demand for auto loans has increased in every state of Tasmania and in ACT.


Looking for a new car? The table below shows auto loans with some of the lowest fixed and variable interest rates in the market.

Rates based on a $ 30,000 loan for a five-year term. Products sorted by advertised price. Prices correct as of September 30, 2021. See disclaimer.

Globally, the demand for credit fell by 14%, despite some categories registering an increase in demand.

This is still a better result than the previous quarterly indices, which registered a decline of 21.9% and 30% in December and September 2020 respectively.

Demand for mortgage loans up by almost a quarter

Perhaps unsurprisingly given recent real estate market news, mortgage demand increased 23.5% in the first three months of the year compared to the same period in 2020.

Each state and territory recorded significant increases, the smallest belonging to Victoria with a growth of 15.2%:

  • TN (+ 50.5%)
  • AO (+ 48.6%)
  • QLD (+ 33.4%)
  • ACT (+ 31.5%)
  • SA (+ 25.9%)
  • New South Wales (+ 24.5%)
  • TAS (+ 18.4%)
  • CIV (+ 15.2%)

According to Equifax Managing Director, Consulting and Solutions, Kevin James, the market is showing a shift towards asset-based lending, with mortgages and auto loans proving to be more popular than liabilities like credit cards and personal loans.

“Ultra-low interest rates are attracting more people to the market, but (are) also an incentive for homeowners to refinance in search of a better rate,” Mr. James said.

The median home price in Australia hit a new record high of nearly $ 900,000 in March, and the Equifax demand index generally coincides with higher prices.

Buying a home or looking to refinance? The table below shows home loans with some of the lowest interest rates on the market for homeowners.

Lender

Rate type Gap Redraw Ongoing charges The initial costs LVR Lump sum reimbursement Additional refunds Pre-approval
Variable More details
LIMITED TIME OFFER

Smart Booster real estate loan at variable discount rate – 2 years (LVR
  • Fast turnaround times, can meet a 30 day settlement
  • For purchase and refinancing, minimum deposit of 20%
  • No ongoing or monthly fees, add compensation for 0.10%

Variable More details
EARN YOUR INTEREST-FREE HOME LOAN

Nano Home Loans Variable Owner Busy, Principal and Interest (Refinancing Only)

  • WIN your interest-free home loan and save up to $ 1.1 million. Refinancing before October 29. The T & Cs apply.
  • Refinancing only. Quick online application, refinance in minutes, not weeks.
  • No Nano fees, 100% free cleared sub-account. Mobile app. Visa debit card and instant payments.
Variable More details
YOU COULD WIN $ 100,000 TO REPAY YOUR LOAN *

Owner Occupant Accelerate – Celebrate (LVR

  • For a chance to win $ 100,000 for your home loan, apply to Athena before October 31 and get approved by December 15
  • We reduce your rate based on the amount you have repaid on your loan
  • Automatic rate matching

Owner Occupant Accelerate – Celebrate (LVR
  • For a chance to win $ 100,000 for your home loan, apply to Athena before October 31 and get approved by December 15
  • We reduce your rate based on the amount you have repaid on your loan
  • Automatic rate matching

Variable More details
EASY ONLINE REQUEST

Garden mortgage (principal and interest) (special) (LVR
  • Unlimited additional refunds
  • Unlimited free withdrawals
  • Optional 100% compensation can be added for $ 120 per year ^

Variable More details
100% FULL ACCOUNTNO APPLICATION FEES OR CURRENT FEES

Low rate home loan – Premium (principal and interest) (owner occupied) (LVR
  • No upfront or ongoing costs
  • 100% clearing account
  • Additional refunds + reprint services

Buy now, pay later sees an increase

Buy Now, Pay Later (BNPL) requests grew 3.7% per year in the March 2021 quarter, despite falling 13.2% in the previous quarter.

All states except Tasmania and Victoria saw an increase in demand for BNPL, with New South Wales showing an increase of 7%.

However, these two states still experienced a recovery in the last quarter.

  • TN (+ 123.5%) *
  • New South Wales (+ 7.0%)
  • SA (+ 6.5%)
  • QLD (+ 5.3%)
  • ACT (+ 2.8%)
  • WA (+ 2.0%)
  • TAS (-1.9%)
  • CIV (-1.3%)

* Low volumes.

“Demand for BNPL continues to come from millennials and millennials, but there are signs that this cohort may have reached saturation,” Mr. James said.

The younger generation – Generation Z – could soon catch up as they represented 26% of the total applications.

“The lowest share is still the baby boomer generation, which is not surprising since many are retired.”

Since December 2020, the BNPL market has seen new entrants such as Commbank BNPL and PayPal Pay in 4 compete with the traditional powers Afterpay and Zip.

Related: Why Buy Now, Pay Later Is So Popular With Millennials.

Personal loans, credit cards still struggling

Every state reported a drop in personal loan and credit card applications, which fell 14.5% and 28.9% per year, respectively, in the March quarter.

These declines are smaller than in the previous quarter (32.3% and 39.5%), but it still means that these loan categories have now declined for seven consecutive quarters (12 for credit cards).

“Despite signs that the market may be moving towards a post-COVID recovery, demand for credit cards continues to decline,” Mr. James said.

“The reduction in economic activity in Victoria since their second foreclosure hasn’t helped, but ultimately a change in consumer behavior puts credit cards out of favor.”

Victoria had the lowest demand for credit cards at -30.9%, while ACT had the fewest applications for personal loans (-25.4%).


Looking for a personal loan? The table below shows personal loans with some of the lowest interest rates on the market.

Rates based on a $ 30,000 loan for a five-year term. * Disclaimer: This comparison rate is only true for this example and may not include all fees and charges. Different terms, fees, or other loan amounts may result in a different comparison rate. Rates are correct as of September 30, 2021. See disclaimer.

Interest rates on personal loans have recently been cut sharply by major lenders, including Westpac and NAB, in an attempt to attract customers.

For credit cards, American Express has launched a new “refund” card that it considers the best in the market, but the trend away from these products continues.

Interest-bearing credit card debt fell 25% throughout 2020 and the number of cards in circulation fell 7%.


Photo via Flickr

The entire market was not taken into account in the selection of the above products. Instead, a smaller part of the market has been envisioned, which includes the retail products of at least the Big Four Banks, the Top 10 Customer-Owned Institutions and Australia’s largest non-banks:

Products from some vendors may not be available in all states.

In the interest of full disclosure, Savings.com.au, Performance Drive, and Loans.com.au are part of the Firstmac group of companies. To learn more about how Savings.com.au handles potential conflicts of interest, as well as how we are paid, please click on the links on the website.

*The Comparison rate is based on a loan of $ 30,000 over 5 years. Please note: this comparison rate is only true for this example and may not include all fees and charges. Different terms, fees, or other loan amounts may result in a different comparison rate.


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