Australians are taking out record amounts in personal loans because ongoing increases in living expenses have reduced savings. Data from the Australian Bureau of Statistics show that banks issued a record $5.1 billion in new personal loans during the first quarter of 2026. These loans are sometimes used for large expenses such as weddings, travel or renovations, but they are also used to cover regular bills or repay other debts. Finance professor Andrew Grant from the University of Sydney noted that rising personal loan volumes often signal financial strain, particularly for those living paycheck to paycheck. Issuance had dropped below $2 billion per quarter between 2017 and 2021 when inflation and housing costs were lower, but volumes increased once interest rates began to climb. New personal loans carried an average interest rate of 9 percent in March, compared with 5.9 percent for new mortgages, according to Reserve Bank figures. Grant said higher interest rates, rents and mortgage payments have made weekly expenses more difficult for many households. Refinancing of personal loans has also increased steadily, which Grant linked to greater use of consolidation to manage existing debts. Car loan volumes have remained stable above $4.7 billion per quarter since 2024. Separate Reserve Bank data showed personal lending grew 4.3 percent in the year to April, extending a recovery that began in 2023. Banks had reduced their holdings of personal and non-mortgage loans since 2015, partly due to lower risk appetite and stricter lending rules. Buy-now-pay-later providers captured much of the market until tighter regulation in 2025 prompted a shift back toward personal loans. Credit agency Equifax reported rising applications for personal loans over the past two years alongside declines in buy-now-pay-later and car loan requests. Major banks including ANZ, Westpac and Commonwealth Bank have expanded their personal lending portfolios in recent years. Non-bank lender Latitude said most of its non-vehicle loans in the year to June 2025 went toward home improvements, debt consolidation and travel. Consumer advocates warn that automated online approvals may allow loans to be granted without adequate assessment of borrowers’ circumstances, contributing to increased calls to debt helplines.
