Margin loans boom
The margin lending market has grown to record highs on the back of buoyant equity market returns, new figures show.
The latest data from the Reserve Bank of Australia (RBA) shows margin loans grew by $2.2 billion, or 21 per cent, in 2004 - the highest year on year growth since the RBA started keeping records in 1999.
The total margin lending market is now worth $15.2 billion.
Despite the growth, the incidence of margin calls is declining, with the average number per day falling from 1.42 to 1.05 per 1000 clients over the year.
Experts attributed the record growth to the stellar performance of Australian equities last year.
Macquarie margin lending Division director Mickey Perrett said: “It has certainly been our highest growth year. I think what is behind it is that the ASX has been at high levels and therefore there has been an increased interest in equities,” he said.
St George margin lending head of distribution Craig Mowll said advisers - both financial planners and stockbrokers - were behind up to 75 per cent of the growth in margin loans.
“What it means is that people are not taking out a margin loan in isolation to the rest of their investments,” Mowll said.
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