New data has pointed to a broad consumer-credit retreat, with younger Australians pulling back most sharply.
Personal-loan demand fell 0.9 per cent nationally, and car-finance demand dropped 7.4 per cent in July, as Australians curtail applications across unsecured credit and housing finance, new Equifax data has revealed.
The decline marked the second consecutive month in which personal-loan demand contracted year on year, a pattern Equifax said had not occurred for more than two years.
It came alongside a 1 per cent fall in credit-card demand – the fourth consecutive monthly decline and a fourth straight monthly fall in mortgage demand.
Equifax chief solutions officer Kevin James said the weakening was evident across discretionary credit products, signalling households were exercising more restraint over new borrowing.
“Across unsecured credit, households are exercising caution and curbing discretionary debt lines. Credit card demand fell -1 per cent YoY, marking the fourth consecutive month of decline – a pattern last observed five years ago in 2021,” James said.
NSW was among the few exceptions in personal loans, recording a 3.8 per cent annual increase in July, while Tasmania posted the largest decline, with personal-loan demand down 14.9 per cent.
Car-finance applications fell across all states, with Western Australia recording the sharpest drop, down 8.7 per cent, followed by Victoria, where applications were 8.4 per cent lower.
South Australia had the smallest fall, with demand down 1.3 per cent.
Younger borrowers retreat
The most pronounced pullback was among Australians aged 26–35, who reduced applications across personal loans, car finance, credit cards, and mortgages.
In July, personal-loan demand from the cohort fell 5 per cent year on year, while auto-loan demand declined 9.8 per cent, and credit-card demand fell 2.9 per cent.
Mortgage demand from 26–35-year-olds fell 20.1 per cent over the same period, and first home buyer demand (FHB) dropped 20.9 per cent.
The decline comes amid higher interest rates, elevated living costs, and a weakening housing market.
Potential investor demand also weakened, with Equifax reporting that applications from consumers holding two or more mortgages fell 15.1 per cent year on year in July, worsening from the 12.7 per cent annual decline recorded in June.
FHB mortgage demand declined 19.2 per cent nationally: Queensland recorded the largest fall, down 25.2 per cent, followed by Western Australia at -19.6 per cent, NSW at -18.3 per cent, South Australia at -16.9 per cent, and Victoria at -16.8 per cent.
Older borrowers buck the trend
Australians aged 56 and above were the only cohort to record growth in personal-loan demand.
Overall demand in the broader age bracket rose 0.9 per cent year on year, while applications for personal loans from those aged 56-plus rose 11.6 per cent.
James said the divergence suggested that older borrowers, who are generally more asset-backed, may be using personal finance for particular household investments rather than discretionary consumption.
“Personal loans reveal a distinct demographic split. While younger age cohorts are scaling back applications, the 56+ demographic recorded a significant +11.6 per cent YoY increase,” he said.
“This mature, generally more asset- backed cohort appears to be drawing on personal credit for targeted household investments, notably solar installations which could be linked to a rise in electric vehicle acquisitions.”
Mortgage downturn deepens
The consumer-credit results coincide with a marked weakening in property finance.
Equifax reported last week that total mortgage demand fell 16.4 per cent year on year in July, following annual declines of 0.9 per cent in April, 6.6 per cent in May, and 18.8 per cent in June.
That trend is also reflected in the latest ABS lending figures, which showed new dwelling-loan commitments falling 5.4 per cent over the June quarter to 134,225.
Owner-occupier commitments fell 3.3 per cent to 81,626, while FHB commitments declined 2.9 per cent to 29,319.
Investor commitments experienced the sharpest fall, declining 8.6 per cent over the quarter.
[Related: Mortgage slump spreads across every state and age group]
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