Australians shrink debt and continue the 'savings habit'

Australian consumers remain more inclined to save and pay down their debts than spend big on credit cards, new research shows.

The credit reporting agency Veda Advantage has found that consumer credit demand is still lagging behind pre-global financial crisis levels, with credit card and personal loan applications for the June quarter flat compared with the same period in 2009.

In addition, the latest Veda Advantage index reported the largest quarterly drop in mortgage credit demand in the six-year history of the survey, down 20 per cent year-on-year.

Instead it seems consumers are more likely to compare savings accounts and put funds away, with Veda Advantage’s head of external relations Chris Gration suggesting that rising interest rates and a “saving rather than spending” mentality may be discouraging Australians from accumulating debt.

“Consumers appear to be continuing the saving habits adopted during the 2009 downturn. Evidence suggests many people continue to focus on paying down debts rather than extending their credit,” he said.

The news comes after data from the Australian Prudential Regulation Authority recently showed that households collectively held $462 billion in bank deposits in June this year – up from the $385 billion recorded in September 2008.

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