THE housing market has seen its biggest jump in mortgage demand in three years, outpacing other forms of consumer credit.
Credit data provider Veda says mortgage applications surged by an annual rate of 6.9 per cent in the June quarter, the strongest rise since June 2010, and up from just 1.9 per cent as of the March quarter.
Veda general manager of consumer risk Angus Luffman says mortgage enquiries are a good indicator of home buyer demand and tend to lead movements in house prices by six to nine months.
“The increase in mortgage enquiries appears to suggest better housing market conditions, a good sign in light of the potential tests facing the Australian economy in the future,” Mr Luffman said in a statement.
Hopes are being pinned on the housing industry as one sector to take up the slack as the mining investment boom fades. The surge in enquiries during the past three months coincided with a cut in the cash rate by the Reserve Bank of Australia to an all-time low of 2.75 per cent in May. However, Veda’s overall consumer credit index showed demand grew by 3.9 per cent in the year to June, down from an annual rate of 4.7 per cent in the March quarter.
Personal loan applications shrank to an annual rate of 6.3 per cent from 10.3 per cent previously, while demand for credit cards remained slim at 1.3 per cent growth annually.
Mr Luffman said the index had historically provided an early indication of movements in consumer spending and retail sales. “The easing in personal loan applications suggests that consumers are reining in their spending due to concerns over the labour market and the fall in the Australian dollar raising the price of big items such as household appliances and imported cars,” he said.