Record Surge in Personal Loans Amid Rising Living Costs in Australia
Personal loans booming as cost of living drives Australians to borrow record amounts
The Guardian
Image: The Guardian
Australians are increasingly turning to personal loans, with new loans hitting a record $5.1 billion in early 2026, as rising living costs erode savings. This trend reflects financial stress, with many using loans to cover bills and consolidate debts.
- 01New personal loans issued reached $5.1 billion in the first quarter of 2026, a record high.
- 02Average interest rates for personal loans were 9%, compared to 5.9% for new mortgages in March.
- 03A significant portion of personal loans is used for debt consolidation and covering regular expenses as inflation rises.
- 04Demand for unsecured credit through personal loans has increased due to economic pressures and changing consumer behavior.
- 05The rise in automatic online loan approvals has raised concerns about responsible lending practices.
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Australians are facing increasing financial pressure, leading to a surge in personal loans, which reached a record $5.1 billion in the first quarter of 2026, according to the Australian Bureau of Statistics. This rise is attributed to escalating living costs that have depleted savings, forcing individuals to borrow for essential expenses, including bills and debt consolidation. Andrew Grant, a finance professor at the University of Sydney, noted that the average interest rate for new personal loans was 9%, compared to 5.9% for new mortgages, highlighting the financial strain on households. The Reserve Bank of Australia (RBA) reported a 4.3% growth in personal lending in the year leading up to April, indicating a continuing trend that began in 2023. Additionally, the automation of loan approvals has raised concerns among financial counselors, as many borrowers are receiving same-day approvals for substantial loans without adequate consideration of their financial situations. This situation has led to increased calls to national debt helplines, reflecting the growing hardship faced by many Australians.
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The increase in personal loans indicates significant financial strain on Australians, affecting their ability to manage daily expenses and debts.
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