Consumers hang tough despite echoes of COVID headwinds
Australian consumers are showing resilience in the face of rising interest rates, fuel prices and other costs, credit agency data shows.
Equifax’s Market Pulse report shows that despite headwinds, strong momentum in consumer activity in the first quarter of 2026 provides a buffer to the national economy.
While mortgage demand increased by 4.1 percent compared to the same three months of 2025, credit card demand increased by 10.4 percent and personal loan applications increased by 7.9 percent.
Notably, it happened just one month out of three following US attacks on Iran, which led to the blockage of the Strait of Hormuz, effectively shutting down a fifth of global crude oil and gas supplies, and setting the global economy up for a major inflationary shock.
“With global uncertainty, supply chain disruptions, high consumer borrowing rates and rising fuel prices, it’s easy to say we can expect to see a dramatic decline in demand for credit,” said Kevin James, chief solutions officer at Equifax.
But 2026’s parallels with the conditions consumers face in 2022 and 2023 have provided some hope that Australians can avoid increasing credit failure and the “mortgage cliff” as costs and interest rates rise.
The period in question covered the aftermath of the Covid-19 outbreak, Russia’s invasion of Ukraine, a 4-point cash interest increase in 13 months and the peak inflation rate of 7.8 percent.
“The data shows the resilience of the Australian credit market as long as factors such as unemployment remain low,” Mr James said.
The 7.5 percent increase in mortgage demand was driven by refinancings and improvements rather than new market entrants, which declined by 3.5 percent.
Mr James said the figures showed Australians were focusing on managing their current financial obligations.
It is not yet known whether the flexibility will continue in the second quarter, with the Central Bank opting on Tuesday to raise the cash interest rate to 4.35 percent, its highest level since December 2024, for the third consecutive meeting.
Continued mortgage demand growth may indicate that the property price cycle has not yet cooled, consistent with previous cycles in which property prices maintained long-term average growth rates of six percent even during periods when interest rates tightened.
But there are signs of increasing stress in personal loans; The amount Australians owe rose by 3.1 per cent in the quarter, while credit card and mortgage debt fell.
Australia’s Associated Press is the beating heart of Australian news. AAP is Australia’s only independent national news channel and has been providing accurate, reliable and fast-paced news content to the media industry, government and corporate sector for 85 years. We inform Australia.
