Margin loan growth slows in 2004

Australia's margin loan market has continued to grow in early 2004 although at a slower rate than last year, official figures released by the Reserve Bank today show. The total value of margin and related loans outstanding increased by $431 million to $12.93 billion in the March quarter. This represents a rise of 3.4 per cent compared to quarterly growth rates above 5 per cent in the second half of 2003. The amount outstanding in protected equity loans showed a small but surprising fall of $13 million to $1,042 million in the three months to March. The rate of margin calls continued to be in the low range at 1.1 per day for every 1000 borrowers.

The slower growth in margin loans outstanding runs counter to a sizeable increase in the total credit limits available to borrowers on their loans which rose almost $1.5 billion during the period. There was also a healthy 2000 rise in the number of margin borrowers to 134,000. Infochoice general manager Denis Orrock says this may reflect a number of existing borrowers taking profits and reducing their LVR exposure in the rising interest rate climate of earlier in the year.