Equifax data indicates credit demand rose 1.5 percent in the three months ended September over the year earlier. Photo: 123RF
Demand for consumer credit continues to increase despite a high interest rate environment and weak economic conditions.
Credit rating agency Equifax indicates credit demand rose 1.5 percent in the three months ended September over the year earlier, with unsecured credit demand the main driver of growth - up 9.4 percent on the year earlier.
Equifax managing director Angus Luffman said the increasing demand was a positive sign against a backdrop of challenging economic conditions.
"Demand for personal loan products continues to increase, led by Kiwis aged 31-45 and is fairly broad based across the regions," Luffman said.
"Personal loans are generally used to fund larger purchases, such as motor vehicles and can be indicative of increasing confidence of consumers to be able to meet larger payment obligations."
However demand for mortgages fell for the ninth consecutive quarter, though the decline has slowed and was on par with pre-pandemic levels.
"Mortgage demand, measured by credit enquiries, is a lead indicator of housing turnover and, in turn, price movements," Luffman said.
"With inflation easing and interest rates on hold since May 2023, the demand for mortgages has continued to stabilise, maintaining the improvement from the June quarter, after the historic lows observed at the start of the year.
"With increased annual net migration and continued low unemployment, the prospects for a return to mortgage demand growth look solid as we head into 2024."
