Sagging property market boosts margin loans
The margin loan divisions at Colonial First State, St George and Macquarie Bank are still the best in the country according to researcher Cannex, which has pointed to a lacklustre property market as a driver for increased gearing into equities.
The margin lending market has almost doubled in the last three years, catering to about 140,000 Australians.
Cannex said the main driver for the increase is the concurrent rise in the Australian share market, but little joy from property is also encouraging margin loan investments.
“Property investors can see margin lending as a similar tool to a mortgage, because it is a geared investment,” said Cannex analyst Harry Senlitonga.
According to Cannex, CFS, St George and Macquarie stand out because of their willingness to lend against a larger stock menu. The researcher also sang its praises for Suncorp, which received the next best four star rating. Senlitonga said Suncorp’s decision last year to let St George administer its margin lending facilities had made it “a much improved product”.
There are currently 13 margin lending providers in Australia. A 14th provider, Bank of Queensland, will enter the market soon.
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