Statistics released by Veda Advantage, the country's largest credit reporting agency, show a large drop in applications for personal credit from those in the Generation Y age group, a demographic which has previously shown little reluctance in taking on debt.

The Veda Advantage analysis takes into account credit applications, including hire purchase, credit cards, personal loans and mortgages, from three demographics: Baby Boomers (born 1946-1964), Generation X (1965-1980) and Generation Y (1981-1994). In all four credit categories, Gen Y reported the biggest drop in applications.

Veda Advantage's figures for May 2009 show that while total hire purchase inquiries for the month, compared to May last year, were down 27.45%, inquiries relating to those in the Generation Y demographic were down a more significant 39.7%.

Veda Advantage New Zealand Managing Director John Roberts says, "Gen-Y credit card inquiries also fell markedly - down 25.9% over the same period compared to an overall 21.97% drop across all three age groups combined. Gen-Y's appetite for personal loans also showed a marked decline, with inquiries from this particular demographic down 40.4% on May 2008, which is far steeper than the overall drop of 19.52%.

"In addition, mortgage applications from Generation Y declined by 5.25%, which contrasted with an overall increase of 2.74% and a significant jump in baby boomer mortgage enquires of 6.83%.

Mr Roberts added, "A year ago our research was showing that, while applications for personal loans and hire purchases had dropped, credit card applications had remained steady, driven in part by an increase in usage amongst Gen-Y. Whilst in the past this generation had become accustomed to taking on debt as a result of student loans, the indications are that they are now becoming more cautious about increasing their indebtedness."

"Another sign of this new Gen-Y debt conservatism can be found in the reduction of reported defaults. Total reported defaults for May were up slightly by 0.6% compared to the same month last year. While Gen-Y reported defaults were down 9.4%, baby boomers by contrast reported an increase of 2.01%."