Housing loans and credit cards fall

by Rebecca Pike13 Feb 2019

ABS figures out today show a dramatic drop in new housing loans, while the number of credit cards are also continuing to fall, according to the RBA.

Housing finance

The new ABS Lending to Households and Business figures show the total value of new lending to households dropped 19.8% from December 2017 to December 2018, in seasonally adjusted terms and excluding refinancing.

Sally Tindall, research director at RateCity.com.au said it was interesting that owner-occupiers took the biggest hit this month.

She said, “New lending to owner occupiers fell the most this month, with a 6.4% drop, compared to investors who fell just 4.6%.

“Looking at the bigger picture however, investors are still leading the retreat from the market, with a 27.8% drop in new loans compared to the year before.”

Credit cards

Also released today, the RBA’s credit card statistics show the number of active credit card accounts dropped to 15.91 million in December 2018, making it the lowest number of credit card accounts since February 2015.

Credit card limits also fell 0.71% year-on-year.

“Today’s figures confirm that our reliance on credit cards is starting to wane, as alternatives such as Afterpay become more attractive, particularly among younger Australians,” she said.

“We expect to see these figures drop even further in 2019 when the new credit card regulations come into play, which are designed to stop people from taking out cards they can’t afford to repay.”

While the number of credit cards has fallen, the value of purchases was up 3.5% year-on-year in December, according to the RBA figures.

“The good news is Australians are making higher repayments and as a result the total debt accruing interest is coming off the boil,” she Tindall concluded.