By: Belinda Luc
Rising rates are finally starting to bite down on borrowers, as mortgage credit demand falls to a six year low.
According to Veda Advantage's quarterly Consumer Credit Demand Index (CDI), released yesterday, demand has not yet returned to pre-GFC levels, with mortgage applications down 20.3 per cent compared to the same April to June period in 2009.
This follows on from a 15 per cent fall in the January to March quarter of 2010 year-on-year.
Veda Advantage head of external relations Chris Gration said rising interest rates and a 'saving rather than spending' mentality was the reason behind the credit demand drought.
"Australian consumers appear to be continuing the saving habits adopted during the 2009 downturn,” Mr Gration said.
“Evidence suggests many people continue to focus on paying down debts rather than extending their credit," he said.
According to Mr Gration, first home owner stimulus activity levels buoyed the market in 2009, so mortgage demand naturally tapered off after the incentives of last year.
According to the CDI, mortgage applications fell steeply in all states year-on year, but most predominantly in Queensland (down 28 per cent), New South Wales (down 23 per cent), Tasmania (down 22 per cent) and Western Australia (down 21 per cent).
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