Our latest credit bureau data has revealed that Australian enquiries into short-term lending products including Buy Now Pay Later (BNPL), credit cards and personal loans have increased significantly in the last 12 months.
The most recent analysis of credit repayment data to February 2023 shows that Australians are turning to short-term lending options to help deal with the rising cost of living pressure brought on by inflation and other factors.
Comparatively, the data shows a decline in mortgage enquiries over the last 2 years, with nine interest rate rises recorded for the same period. However, there are signs of improvement with residential mortgage enquiries trending up over the last three months.
Buy Now Pay Later
- Enquiry volumes for BNPL services have increased by 28% in the year since February 2022 and are up 42% in the last 2 years since February 2021.
- After a drop in enquiry volumes in January 2023, February 2023 enquiries increased 55% month-on-month.
- February 2023 enquiry volumes for BNPL services are the highest observed since the seasonally high retail spending pre-Christmas period of Nov 2021.
Credit Cards
- Enquiry volumes for credit cards have increased 54% in the last two years since February 2021 and are up 31% in the last 12 months since February 2022.
- In the three months between December 2022 and February 2023, enquiries increased by 16%.
- February 2023 had the third highest enquiries recorded in the last two years, behind January 2023 and November 2022.
Personal Loans (the Big 4)
- Enquiry volumes for personal loans with the Big 4 banks have increased 36% in the last two years since February 2021 and are up 26% in the last 12 months since February 2022.
- February 2023 had the second highest number of enquiries for personal loans in the last 2 years, after January 2023 as Australians dealt with eight consecutive months of interest rate rises.
Mortgages
- Enquiry volumes for mortgages have decreased 14% in the last 12 months since February 2022.
- Enquiry volumes have increased 23% in the last three months from December 2022 to February 2023 and have also had a monthly increase of 29% comparing February 2023 to January 2023.
With the RBA raising interest rates two more times since February 2023, borrowers have now experienced eleven rate rises since May 2022, pushing even more Australians with mortgages and loans to feel the economic pinch.
Tristan Taylor, General Manager Credit Services A/NZ said:
“The lending landscape has changed significantly over the last two years driven by the evolving needs of everyday Australians amidst inflation and other forces. Many Australians with mortgages and loans are likely to be feeling the economic pinch so lenders need to adapt.
With this outlook, automation, data and analytics, and decisioning are going to be key for credit providers who are committed to proactively monitoring their customers’ financial health. This not only helps protect their loan portfolio, but proactive assessment shows genuine care for customers allowing lenders to identify and assist those who may be financially vulnerable and at risk of facing hardship.”
If you’d like to better understand how the cost-of-living pressures are affecting your portfolio and how Experian can help, please get in touch with us using the form below.