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Banking
Retail credit tightens as lenders reprice unsecured lending
Approval rates on unsecured personal lending have fallen as banks reweight affordability assessments, with knock-on effects for retailers.
The consumer credit tap has not closed, but it has narrowed.
Lenders have tightened affordability assessments on unsecured personal lending, and retailers dependent on credit-funded purchases are feeling it first.
What is driving it
- Arrears in specific cohorts running above model expectations
- Higher provisioning requirements on unsecured books
- A deliberate shift towards secured and salary-linked lending
Where it shows up
Furniture, electronics and vehicle retail see the effect fastest. Grocery and essentials are largely unaffected, which tells you the tightening is targeted rather than general.
We are not turning away good customers. We are asking harder questions of marginal ones.
The household picture
Debt service as a share of disposable income remains the pressure point. Until wage growth outpaces it, credit-funded consumption stays subdued regardless of where the policy rate sits.
