NZers Back Buying On Credit With Baby Boomers Leading Way

NZers Back Buying On Credit With Baby Boomers Leading The Way

17 October 2011

Consumers are back buying on credit but post the Global Financial Crisis they are choosey about the type of credit they are prepared to take on.

Latest statistics from credit bureau Veda shows consumer activity in the credit market continuing to strengthen after several years of decline.

Veda Managing Director John Roberts says the statistics reinforce economy wide indications that the country has reached the base of the credit demand cycle and is now trending incrementally upwards.

“What we are seeing is people slowly returning to credit for their purchases but the statistics show people are cautious and not over-reaching themselves,” Mr Roberts says.

Hire purchase and credit card inquiries are up thanks in large part to baby boomers. In contrast it is Gen Y that is keeping mortgage inquiry levels up showing that nesters believe it is a good time to be buying.

Mr Roberts says the statistics highlight interesting behavior.

“Consumers have turned away from personal loans. They appear to have chosen to consolidate debt to minimise their personal risk exposure in the aftermath of the Global Financial Crisis.”

“Commercial credit inquiries are continuing to trend down. This indicates that SMEs are still choosing to use personal credit lines rather than securing debt against the registered entity.”

While the bureau statistics show a substantial fall in consumer defaults, commercial defaults are continuing to rise.

Historically the commercial market lags behind the consumer market by 18 months suggesting that commercial defaults will continue to rise for another six to nine months.

Statistic highlights for the nine months January to September 2011 compared with the same period last year

• General credit inquiries up 3.49 percent
• Hire purchase inquiries up 3.19 percent
• Personal loan inquiries down 10.23 percent
• Credit card inquiries up 12.94 percent
• Mortgage inquiries up 12.94 percent (baby boomers up 28.07 percent)
Mortgage inquiries September only compared with September 2010 up 36.51 percent for Gen Y.

(Statistics in full below - note these are an easier read in the attachment)

General consumer inquries January to September – incremental lift of 3.4 percent
Year 2005 2006 2007 2008 2009 2010 2011
% change 8.45% -4.48% -7.73% -9.44% -8.61% -11.37% 3.49%

Hire purchase inquiries January to September – slight lift across total population
Year 2005 2006 2007 2008 2009 2010 2011
BB -11.10% 3.59% -4.91% -11.68% -24.45% 7.21% 5.12%
Gen X -14.12% -6.28% -9.76% -11.66% -24.49% 3.38% 1.35%
Gen Y -19.84% -11.38% -11.96% -13.15% -27.37% 4.80% 2.57%
Total -15.51% -5.06% -8.99% -11.81% -25.05% 5.44% 3.19%

Personal loan inquiries January to September – down across the board
Year 2005 2006 2007 2008 2009 2010 2011
BB 3.66% 13.77% 5.73% -11.59% -12.21% 82.36% -9.94%
Gen X -1.69% 7.95% 4.83% -15.01% -12.49% 82.72% -10.05%
Gen Y -1.50% 11.09% 6.66% -16.29% -11.66% 102.02% -11.40%
Total -0.52% 9.93% 5.58% -14.43% -11.58% 88.44% -10.23%

Credit card inquiries January to September - 28.09 percent increase for baby boomers
Year 2005 2006 2007 2008 2009 2010 2011
BB 17.24% 32.98% -7.25% 9.77% -7.87% -14.76% 28.07%
Gen X 12.89% 36.43% -11.44% 5.37% -7.27% -17.71% 3.29%
Gen Y 25.43% 24.16% -15.78% 14.80% -17.95% -6.96% 5.92%
Total 17.17% 31.56% -11.81% 9.42% -10.67% -13.53% 12.94%

Mortgage inquiries January to September – 28.07 percent increase for baby boomers
Year 2005 2006 2007 2008 2009 2010 2011
BB 17.24% 32.98% -7.25% 9.77% -7.87% -14.76% 28.07%
Gen X 12.89% 36.43% -11.44% 5.37% -7.27% -17.71% 3.29%
Gen Y 25.43% 24.16% -15.78% 14.80% -17.95% -6.96% 5.92%
Total 17.17% 31.56% -11.81% 9.42% -10.67% -13.53% 12.94%

Mortgage inquiries month of September – 36.61 percent increase for Gen Y
Year 2005 2006 2007 2008 2009 2010 2011
BB 22.26% -16.99% -22.86% 6.62% 62.64% -11.48% 16.38%
Gen X 25.25% -25.74% -26.72% -2.88% 48.89% -11.85% 29.74%
Gen Y 49.52% -18.38% -17.76% -1.23% 14.62% -11.19% 36.61%
Total 25.80% -21.69% -23.48% 1.02% 51.90% -10.93% 24.70%

Overall defaults January to September – down 23.17 percent
Year 2007 2008 2009 2010 2011
Total 12.22% 12.88% 6.48% 18.10% -23.17%
BB 17.37% 16.32% 19.36% 19.84% -19.52%
Gen X 10.67% 9.10% 3.55% 20.49% -22.70%
Gen Y 16.09% 8.89% -2.27% 13.45% -22.21%

ENDS

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