Mortgage applications in Australia fell in the June quarter by -3.2 per cent compared to the 2015 June quarter.

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.

There’s been a significant slowdown in customers signing up to new credit cards.Source:istock

Despite this the nation’s appetite to sign up to credit cards and new mortgages has soured, new figures from credit reporting agency Veda found.

The slowdown to residential property markets, weak wage growth and subdued sales growth has been blamed for the fall.

Credit card applications experienced a decline of 0.5 per cent compared to the 2015 June quarter which is the first fall in three years while mortgage applications fell by 3.2 per cent year on year.

Veda’s general manager of consumer risk Angus Luffman said multiple factors were to be blamed for a stalling of consumer credit.

Veda’s general manager of consumer risk Angus Luffman said consumer credit remained flat in Australia in the June quarter.Source:Supplied

“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.

HSBC chief economist Paul Bloxham said the slowdown in the residential property had been blamed for the reduction in applications for consumer credit.Source:Supplied

“A part of this is the regulatory authorities have been tightening up their settings and that has slowed down credit growth, lending to investors has also slowed down,’’ he said.

“We are seeing some cooling in the housing market and we’re seeing a significant boost to a supply of apartments which is also contributing to the cooling in the housing market.”

He said if inflation data which will be released later this month is low he expects the Reserve Bank of Australia to cut the cash rate in August from 1.75 per cent.

sophie.elsworth@news.com.au