Published : Mar-2017
No. of Pages : 36
1. EXECUTIVE SUMMARY 2
1.1. The Australian personal loan market is entering a period of slower growth 2
1.2. Key findings 2
1.3. Critical success factors 2
2. OVERVIEW TO 2016 7
2.1. Personal lending balances decreased in 2016 7
2.1.1. 2016 gross advances started to grow again after two years of decline 7
2.1.2. Balances outstanding marginally contracted in 2016 by 1.3% year-on-year 7
2.1.3. Economic growth has continued, but capacity and willingness to take on more debt will be constrained 7
2.1.4. Product preferences have seen little change in recent years 8
2.1.5. Fixed-rate loans remain most attractive to Australian consumers 8
2.1.6. Australian consumers are more price-sensitive on car loans 9
2.2. Macroeconomic disparities across Australia's states have led to debt concentration increasing 11
2.2.1. The rebound in the share of lending on the Eastern Seaboard has not come from dramatically higher volume 11
3. OUTLOOK FOR 2017 AND BEYOND 12
3.1. Total fixed and revolving credit loans will reach A$156.6bn by 2020 12
3.1.1. Market growth will resume but will only see modest gains 12
3.1.2. 2017 will be the start of a slow turnaround for gross advances 12
3.2. Demand for credit will slowly increase 13
3.2.1. Macroeconomic conditions will help to maintain consumer demand at current levels 13
3.2.2. Lenders need to be aware of the geographic concentration of their assets, as household debt-to-income reaches a new high 14
3.2.3. Consumer confidence is recovering, albeit with some hesitancy, suggesting consumers may be unsure of their ability to take on new debt 15
3.2.4. Retail sales are showing signs of growth, supporting uneven lending growth 16
3.3. Traditional lenders risk further loss in market share as new competitors take advantage of shifts in consumer behavior 17
3.3.1. Australian consumers are becoming more comfortable using non-ADIs for financing 18
3.3.2. Providers need to maximize their cross-selling opportunities 18
3.3.3. Consumers have become more comfortable with non-traditional lenders 18
3.3.4. Internet research has become a standard research channel, with consumers comparing reputation and rates 21
3.4. Lending across the subsectors of consumer credit will vary significantly 21
3.4.1. The new and used car finance market will be the strongest-performing sector 21
3.4.2. Gross advances for new and used cards will almost match credit cards and unsecured line of credit lending by 2020 23
3.4.3. Increased credit card lending will require winning clients off rivals 24
3.4.4. Demand for debt consolidation and refinancing products will rebound but then gradually decrease over the forecast period 25
3.4.5. Demand for new and used car finance will outperform all other sectors 26
3.4.6. The travel and healthcare lending categories will grow moderately in response to an improving economic outlook 27
3.4.7. Credit for land and housing construction will enjoy strong growth 28
3.4.8. Financing for household goods will experience strong growth over the forecast period 30
4. INNOVATION WILL NURTURE NEW SOURCES OF CREDIT 31
5. APPENDIX 32
5.1. Abbreviations and acronyms 32
5.2. Definitions 33
5.2.1. Gross advances 33
5.2.2. Balances outstanding 33
5.2.3. Line of credit 33
5.3. Methodology 33
5.4. Bibliography 33
5.5. Further reading 34
List of Tables
Table 1: Gross advances per state (A$000m), 2010-16 11
Table 2: Gross advances (A$000m), January 2010-October 2016 19
Table 3: Australian personal lending balances outstanding (A$bn), 2015-20f 22
Table 4: Australian personal lending gross advances (A$bn), 2015-20f 24
Table 5: Gross advances and balances outstanding (A$bn), 2007-16 32
List of Figures
Figure 1: Australian consumers' historic restraint has caused balances outstanding to fall despite a recovery in new lending 8
Figure 2: Few Australians opt for the uncertainty of variable rate products 9
Figure 3: Partnering with car dealers will require fast approval and competitive rates 10
Figure 4: Total fixed and revolving credit lending will reach A$156.6bn by 2020 13
Figure 5: Future rate cuts unlikely, raising potential problems for debt servicing in Australia 15
Figure 6: Consumer confidence has been volatile, indicating a degree of hesitancy 16
Figure 7: All retail sectors experienced moderate-to-strong growth in 2015 17
Figure 8: Non-ADIs are starting to grow their market share quickly 19
Figure 9: Specialist finance companies in the
