Applications for personal credit have dropped significantly according to credit reporting agency, Veda Advantage.
Veda released figures showing a 52 per cent decrease in hire purchase applications for the first quarter of 2008.
Applications for personal loans were down 12 per cent.
Veda's analysis takes into account creditapplications from three demographics - Baby Boomers (born 1946-1964), Generation X (1965-1980) and Generation Y (1981-1994).
Veda's country director John Roberts said the figures lent weight to recent talk of a slump in consumer confidence.
"Rising fuel and food prices coupled with high interest rates are putting the squeeze on household budgets.
"Our figures show a 33 per cent increase in the outgoing cash flow of the average household over the last couple of years.
"It is not surprising to see applications for hire purchases and personal loans drop off to such an extent as household expenditure stresses kick in."
The drop in personal loans reflects the tendency for homeowners use the equity of their homes by using the revolving credit facility to purchase more expensive items such as whiteware and high-end electrical goods, Mr Roberts said.
Credit card applications have remained steady, driven in part by an increase in usage amongst Generation Y.
Mr Roberts said Generation Y were used to taking on debt because of student loans and consider cards another form of unsecured credit.
"They are increasingly credit dependent, with credit cards superseding HP and personal loans as the most popular form of credit.
"We're currently in the downturn of the credit cycle. Mortgage and personal credit applications peaked in 2005, and fell back in 2006 and 2007.
"So while the immediate outlook for retailers isn't great, the historical trend would indicate we are likely to see an upswing in 2010."
