Demand for credit is the lowest since 2004 and defaults have almost doubled in that time, credit information provider Veda Advantage says.

There has been a 32 percent increase in defaults on phone bills for the year-to-date compared to a year earlier.

"As global credit markets continue to fall, the signs of growing stress are appearing among New Zealand consumers," Veda Advantage New Zealand director John Roberts said.

Figures from Veda Advantage's credit bureau, which holds the credit files of around 97.5 percent of New Zealand's credit active consumers, compare the consumer credit picture for 2008 up to the end of September, with the same period over preceding years.

Total applications for consumer credit are down 10.5 percent on 2007 and applications are at the lowest level in four years.

Mortgage applications from January to September are down 17 percent on the same period last year and at the lowest level in six years.

Hire purchase applications decreased 17.5 percent in the third quarter of this year from the corresponding quarter last year and are down 15 percent on the second quarter of this year. But credit card applications are up 10.5 percent.

Consumer defaults rose 18 percent in the year-to-date compared to the same period last year, and defaults in the month of September are up 24 percent on September last year.

"The big increase in defaults for the month of September is perhaps a harbinger of what's to come," Mr Roberts said.

"The overall decline in applications for credit, with the exception of credit cards, reflects the wariness people have of burdening themselves with additional debt in the current climate.

"The fact that we've hit a four year low for credit inquiries is an indication of how far confidence has slipped," he said.

"We are also witnessing increasing numbers of people turning to the revolving lines of credit offered by credit cards as a means of staving off other debts."