Debt Consolidation & Lending

Personal lending debt versus real estate lending

According to the Bureau of Statistics latest figures for May 2009, personal loans fell 2.9 per cent overall to just over $6 billion. In the same month credit card borrowing fell 4.8 per cent. This trend indicates that Australians are becoming more careful with their debt. The latest statistics from the Reserve Bank shows that overall credit card balance fell for the first time since 1995.

While credit cards and personal loans borrowing is reduced, the real estate borrowing is on the increase. New home loans are taken by first home buyers and investors moving their money from other investments such as shares into the real estate market. Loans for the renovation of existing houses are taken in large numbers as well.

Real estate lending has risen by 3 per cent in May 2009. This rising trend has started in October 2009 as a direct result from sharp reduction in interest rates. The Reserve Bank is prepared to cut the interest rates even further if the economy worsens.

Australian banks are in a much better financial position than banks in many other countries, enabling them to continue lending. If the job losses have reached their peak the consumer confidence levels will increase prompting a rise in borrowing and spending.

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