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Home improvements, debt consolidation and vehicle purchases have driven a doubling in personal loan growth in the first quarter of the financial year 2022 for Platform Finance.
Asset finance aggregation group Platform Finance has revealed that there has been a resurgence in demand for personal loans recently, with the group announcing a 100 per cent growth in personal loan settlements in 1Q22 compared with the same period in FY21.
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According to Damian Mantini, Platform Finance’s director aggregation and strategic partnerships, the COVID-19 pandemic has created strong demand for personal loans generally.
He put this down to a “trio” of key drivers: “Firstly, the pandemic has allowed people to review their current situations and it’s led to an increase in home renovations/enhancements and debt consolidation, secondly, funders’ appetites for personal loans have grown; and, thirdly, interest rates have fallen for those with strong credit profiles, which enables greater flexibility.”
Mr Martini added that he also believed that “the stigma around personal lending has broken”.
“Before the pandemic, there were negative perceptions around this sector, but there’s been a major transformation and personal lending is now increasingly commonplace,” he suggested.
Platform Finance chief executive Ryan Young noted that the demand for personal loans had particularly accelerated over the past 12-14 months: “It really started to take off between August and October last year.
“Once the initial pandemic shock wore off and people realised they weren’t going to be travelling for a while, the focus quickly shifted to fixing up homes and paying down debt.”
According to Latitude – one of six personal finance lenders on Platform’s panel – home improvements and furnishings accounted for 23 per cent of all personal loans during the third quarter of 2021, while debt consolidation was 21 per cent.
Meanwhile, recent figures from the Australian Bureau of Statistics (ABS) show that the value of new loan commitments for fixed term personal finance rose 0.4 per cent in September 2021 (seasonally adjusted), driven mainly by a 1.9 per cent rise in lending for the purchase of road vehicles.
Mr Mantini commented: “We’ve witnessed the boom in housing mortgages and there has been a concurrent growth in home renovations and improvements – not to mention demand for lifestyle assets that might not ordinarily fit asset finance solutions – which is why we’ve been expanding our lender panel and providing education and training to our brokers.
“We want to give brokers options and the confidence to promote these solutions and make it easy for them to write the loans,” Mr Mantini said.
“We’ve seen a lot of mortgage and asset finance brokers diversify into personal lending, and we have been helping them easily move into this segment.”
Mr Young added: “We are getting great support from lenders in the personal finance space and will continue to look at more lenders as long as they offer a genuine point of difference.”
The CEO predicted that personal lending growth would likely continue to grow “in the short to medium term”, as the “significant fall in rates for prime borrowers will open up a whole new pool of customers for our brokers"”
“In addition, supply chains are so stretched, which means there’s a delay in getting goods and services. There’s still a lot of pent-up demand.”
The figures echo a general trend in industry. Plenti released its half-year results for the six months to 30 September on Wednesday (17 November), revealing it had gained $473 million in new loan originations, more than double (up 183 per cent) from the prior corresponding period (pcp).
[Related: Plenti chips away at turnarounds in quest to $5bn]
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