Gen Y a safer bet than Baby Boomers: Veda

Wednesday 7th October 2009

Young New Zealanders are the best credit bet, with Baby Boomers more likely to default on the debts, according to a Veda Advantage report.

Defaults for those aged under 28, the so-called Gen Ys, actually fell in the year to September, a period which took in two quarters of recession. The statistics worsen with age, according to Veda, New Zealand’s biggest credit checking company.

Gen X defaults – those aged between 28 and 42 – increased 3.6% while for Baby Boomers, aged 44 to 62, defaults surged by a whopping 19.4%.

“The lifestyles of the Baby Boomers are coming home to roost,” said managing director John Roberts. “They are defaulting on debts mounted up over years which they can now no longer service. The recession has seen many Baby Boomers lose their jobs while others have had their wealth eroded.”

Rising defaults haven’t quenched the appetite of older people to borrow more. Mortgage applications by Baby Boomers climbed 19% in the nine months to September compared to the same period last year. That outpaced overall demand for mortgages, with total applications gaining about 13%, the first such increase since 2005.

Mortgage applications for September were also the highest for that month since 2005.

Hire purchase applications fell 25% in the nine months through September, while credit card requests fell about 11%, according to Veda.

“The recession has changed the way people think about spending – they’re cutting back on their use of credit and they are starting to save for big purchases,” Roberts said.

Veda is seeing the recession “start to flatten in terms of the credit demand cycle,” he said.

Businesswire.co.nz

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