Margin loans: no place for mum and dad investors

John Kavanagh

The use of margin lending continues to decline, but among those who continue to borrow to invest in shares and managed funds the amount of borrowings has increased significantly in the past year.

According to the latest Reserve Bank margin lending data, the number of accounts fell 9.3 per cent to 97,000 in the year to March.

However, total borrowings grew from A$14.1 billion to $19.3 billion over the same period – an increase of 36.9 per cent.

The average borrowing, $199,525 per account, shows that margin loans have become the preserve of sophisticated and high net worth investors.