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The value of personal loans hit a new high in the December quarter of 2024, according to new statistics, with brokers revealing new trends in borrower demand.
According to the ABS Lending Indicators data for the three months to December, the value of new personal loan commitments hit $8.4 billion in the December quarter – up 17.9 per cent on the same period in 2023 and up 1 per cent since the September quarter of 2024.
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Road vehicle personal loans rose 13 per cent year on year, while personal loans for other investments (such as travel/holidays, household goods and “other” vehicles) were up 26 per cent.
Speaking to The Adviser about the rise in personal lending, senior broker Cruz Blanchett from National Finance & Loans said around 70 per cent of his business was consumer personal lending at the moment, with around half of that being unsecured loans. The remainder was asset finance.
According to the broker, there had been a “significant but sustainable growth” in green goods, such as electric vehicles and solar panels, noting he had seen a 37 per cent rise in inquiries for electric vehicles and solar panels in 2024.
Speaking to The Adviser, Blanchett said: “Across all demographics but particularly Millennials and Gen Zs – particularly those who are starting to move out of their family home – are more cost-conscious.”
While he noted that green purchases were partly driven by the “eco-conscious”; he said that it was mostly driven by cost, as green incentives were attractive and repayments on solar panel loans generally result in a reduction in electricity bills while adding value to housing assets.
One core trend that he noted was more people using personal loans for “revenge travel” after COVID-19, paying for a wedding (many of which were postponed over the lockdown years of COVID-19), or those preparing for a child, citing that Australia had a record number of babies born in 2021 (315,705; around 20,000 more than the year before).
“Some of them are taking up personal loans for home renovations, to do up their house to support a bigger family, and I’m seeing a shift in what people are needing money for in those aspects, as far as growing the house, and saving for the cost of the house,” he said.
High prices are also driving more people to take out personal loans to finance major purchases, including luxury cars and larger household goods, such as televisions and white goods.
Many borrowers are also opting for personal loans instead of mortgage redraws or refinancing, as they seek to preserve their home equity, Blanchett said.
At the same time, there has been a 15 per cent increase in debt consolidation loans, largely due to rising interest rates and cost-of-living pressures. Rather than rolling multiple debts into their mortgage – where they would pay interest over a longer period – many borrowers are choosing personal loans to manage their repayments more effectively, the broker noted.
He concluded that another notable trend is the shift away from buy now, pay later (BNPL) services, as consumers become more cautious with their spending. While he suggested that many clients would come with “over half of their salary just going straight to buy now, pay later” two years ago, particularly for “spontaneous” purchases, this has recently dwindled.
Indeed, Blanchett suggested that those who may have used BNPL had already been “caught and bought”, and – with cost of living increasing – more people were being “conscious” about their purchases and planning larger purchases with personal loans. Moreover, he noted that interest rates on personal loans were now much lower than they were in recent history (in some cases, around 6 per cent).
“I’m finding it’s often for something that you wouldn’t really have to pay over four weeks; you’d want to pay it back over a year or more, because it’s a larger amount. Maybe you need to furnish a home, or you want to pay for your wedding, you want to go on international travel, something like that, you wouldn’t really have the option to pay the small market there,” he said.
When asked what advice he would give brokers writing personal loans for the first time, Blanchett said: “Let [clients] know it’s what you offer and, if you do a good job, you’ll be amazed at how much people will [use it].
“If you do a good job to one person, they’ll tell all of their friends, they’ll tell all their family members. If you just let people know that you offer that, and then when you start offering it, you’ll just see it, it’ll just go crazy.”
[Related: Bankwest confirms personal loans exit]
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