Consumer appetite for unsecured credit surged in August, with overall demand up +19.9% year-on-year, according to Equifax.
Buy now, pay later (BNPL) was the strongest driver, rising +56.1%, followed by credit cards (+25.2%) and personal loans (+14.1%). Credit card applications also showed momentum across different timeframes, with +8.2% growth year to date and +7.7% month-on-month.
In a separate release, Equifax’s Q2 2025 report also highlighted that rising unsecured demand is being matched by a surge in the dollar value of delinquent accounts across mortgages, cards and personal loans, signalling concentrated risk even as overall arrears rates remain stable.
Equifax data revealed mortgage demand rose +10% in August compared to the same month last year, following RBA’s August rate cut. Year to date, mortgage demand is +5.2% higher than January-August 2024.
However, mortgage demand was down -5.1% in August compared with July, pointing to softer short-term momentum.
Refinance activity remained elevated, making up 35.86% of total mortgage enquiries. New mortgage originations, however, softened – down -1.5% year-on-year and -2.3% month-on-month, accounting for 31.74% of all enquiries in August.
“Spurred on by another interest rate cut, we saw mortgage demand increase 10% year-on-year in August. This is despite reports that listings are lower than usual for this time of year, illustrating that buyers are in the market and actively looking to take advantage of lower rates,” Kevin James (pictured), chief solution officer at Equifax, said.
James noted that lenders are likely to place greater weight on borrower capacity in coming months.
“Looking ahead, we expect that repayment capacity will become a major consideration for lenders over the coming months, which could in turn have an impact on mortgage enquiries and approvals,” he said.
“As more stock comes onto the market during the spring selling season and prospective home buyers are given a boost by the expansion of the government’s First Home Buyer Guarantee scheme, we might see affordability become less of a barrier for a period.
“However, over time it’s likely that prices will continue to rise, and lenders will need to carefully consider the long-term repayment capability of consumers who enter the market with a lower deposit.”
This aligns with Equifax’s June-quarter findings, where First Home Buyer intent surged, particularly among younger buyers, but the dollar value of delinquent mortgage accounts rose by 10.1%, showing stress is building among higher-value loans.
Auto loans: +2.0% year-on-year, but down -1.4% month-on-month.
Personal loans: +14.1% year-on-year, +8.4% year-to-date, and +3.2% month-on-month.
BNPL: +56.1% year-on-year and +30.9% year-to-date, though demand fell -4.9% vs July.
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