A large number of Australians are struggling with personal loans, with almost half of those with a loan feeling anxious, stressed or trapped by increasing debt.
New research from comparison website Finder.com.au reports that 47% of those with a personal loan feel overwhelmed. The report also found there had been a significant rise in the number of Australians seeking out and applying for personal loans (on Finder.com.au), with a sizable 40% increase in traffic in the first quarter of 2016 compared to 2015.
The most common reason people took out a personal loan was for the purchase of a car, with debt consolidation, a holiday and a student loan or education also popular reasons.
The average Australian personal loan balance came to $12,643, while the average personal loan interest rate is 10.91%.
Bessie Hanson, money expert at Finder, believes the personal debt crisis will have certain consequences for the mortgage and brokerage industry.
“Personal debt reduces borrowing power,” she says, “and the $12,643 average personal loan would reduce borrowing power significantly - by up to $41,000.
“This could lead to a reduction in demand for mortgages as consumer financial flexibility reduces but prices remain relatively stable.
“And this is indeed what we are seeing. The average home loan has decreased in value every month over the last three months (currently $357,200), and mortgage applications have also slowed,” Hanson added.