Personal loans are on the rise among Aussies. But why?
As we emerge from years of COVID restrictions into an economy hit by rising consumer prices, supply chain issues and inflation, it seems that many Aussies are turning to personal loans to fund their return to normality.
Personal loan lending is hitting a high, according to the Australian Bureau of Statistics (ABS data ). Across all personal loan categories, February and March of this year saw increases only beaten by the March-April-May period of 2016. February 2022 saw $2.295 billion in personal loans, the second-highest lending number recorded in the close-to twenty years of available ABS data.
Perhaps the simplicity and versatility of a personal loan is proving an attractive way to go for many Aussies looking to cover typical costs.
Australian car loans hitting new highs
The recent data also suggests that Australia is experiencing somewhat of a car sales boom. The beginning of 2022 saw notable growth in personal loans taken out for the purchase of road vehicles.
In February 2022, $1.312 billion was loaned for car purchases, approaching the two-decade high of $1.355 billion in March 2016. Although there was a drop in March, it was only slight at $1.284 billion, making it the fourth-highest month on record.
This surge in car loans is a bit surprising, as both the new and used car markets have been dealing with supply issues since the start of the pandemic, leading to high demand and soaring prices.
Further still, Moody Analytics reported that used passenger car prices increased by 18% in the first quarter of 2022. Australians looking to purchase new cars face up to 12-month wait times, so more people are turning to the used market, which is then, in turn, seeing far fewer trade-ins and resales.
A possible contributing factor to the sudden increase in car loans is the terrible flooding that hit Queensland and New South Wales earlier this year. After the unprecedented rainfall, around 22,000 cars were written off, forcing thousands of Australians into the already undersupplied car market.
More Aussies using personal loans for household and personal goods
As inflation has hit the Aussie economy and the cost of everyday items has increased, it seems more people than ever are turning to personal loans to fund big household and personal expenses.
March 2022 saw $136 million in household and personal goods loans, the highest ever for the specific personal loan category.
It seems that consumer borrowing has increased with the cost of living, as people turn to lenders to fund essential purchases, such as household electronics and furniture.
Travel and holiday loans slowly recovering
Borders are open and life is slowly returning to normal. Aussies are shaking the dust off and rekindling their wanderlust. As the winter chill sets in, it’s no wonder folks are jetting off for exotic beach holidays, but how are people paying for them?
It’s likely that many travellers are investing their savings from the COVID-period, or maybe even cashing in some hard-earned credit card rewards points. ABS data shows that the number of Australians turning to personal loans for holidays is on the rise, but still nowhere near pre-pandemic numbers.
February 2020 was the last time that travel loans were maintaining a fairly average rate of $36 million, but it quickly dropped to $2 million by April 2020. We’re seeing some recovery in March this year, hitting a two-year high of $21 million.
Are you considering a personal loan? Head to our personal loans hub for comparisons and guides, and check out the best personal loans in Australia this month for Mozo Experts Choice Award winners and editor’s picks.
Currently, the average interest rate across all unsecured personal loans in the Mozo database is 9.43%, so if you’re wanting a loan to cover immediate expenses, it could be a good idea to look for one with a low interest rate. Check out some top low interest personal loans below.