Alarming new figures released yesterday by the Australian Financial Security Authority found personal insolvencies in the June quarter climbed by nearly 14 per cent compared to the June 2015.
Debt agreements — an agreement between a debtor and a creditor where creditors agree to accept a sum of money from the debtor — rose by nearly a massive 25 per cent.
Bankruptcies increased by seven per cent.
Veda’s general manager of consumer risk Angus Luffman said multiple factors were to be blamed for a stalling of consumer credit.
“The continuing slowdown in residential property markets, coupled with weak wages growth and subdued retail sales growth had all contributed to the continued slowdown seen in the June credit demand index — which measures demands for discretionary consumer credit,’’ he said.
“Turnover for household goods which is often big-ticket items like whitegoods and couches which are financed by credit has slowed significantly in recent months.”
Australian Bureau of Statistics lending data released yesterday found total new lending commitments including housing, personal, commercial and lease finance dropped by 3.2 per cent in May, the second consecutive fall.
Lending totalled $67.5 billion in May which was down seven per over the year and sat at a 17-month low.
HSBC chief economist Paul Bloxham blamed the cooling of the housing market for the softening of the willingness to borrow.
One Person to Blame
Were it not for Keen’s incessant fearmomgering about the Australian housing bubble, property values in Sydney alone would now be worth more than the sum total of property values in the US, China, UK, Mars, and Uranus combined.
Were it not for Keen, every property owner down under could retire now and live off the perpetual appreciation of their property wealth.
For those who did not catch the sarcasm, Steve Keen is a good friend who I expect will appreciate this joke.
Mike “Mish” Shedlock