Pete Wargent blogspot

Co-founder & CEO of AllenWargent property advisory & buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place) - clients include hedge funds, resi funds, & private investors.

4 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.

"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he is one of the better property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete Wargent is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.

"I've been investing for over 40 years & read nearly every investment book ever written yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.

"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data and charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, and author of the New York Times bestsellers 'End Game' and 'Code Red'.

"Pete's daily analysis is unputdownable" - Dr. Chris Caton, Chief Economist, BT Financial.

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Wednesday, 5 April 2017

Record credit card debt (or not?)

For the record

A phrase that seems to be getting bandied around a lot lately: "record credit card debt", without any real clarification of what that actually means.

Seems odd, certainly, given that personal credit growth has fell to zero in 2015 and has been reported as negative for more than a year (which itself is extremely unusual). 

I thought that I'd take a look at the statistics to find out for myself.  

And for the total value of credit card balances accruing interest the Reserve Bank of Australia (RBA) says...nah.

In fact the Australian population has grown substantially over the last decade from about 20 million, to 24.42 million today.

And in turn the statistics show that the average credit card balance accruing interest has fallen by more than 20 per cent since April 2012.

Interest rates are typically lower today too, with somewhat smarter consumers around these days (well, some of them are a bit smarter anyway). 

The proportion of credit card limits used recently dropped to its lowest level in 14 years. 

More folks today are also, quite wisely, deciding to use offset accounts to build up mortgage buffers.

So, it's a resounding no to record credit card debt.

Of course, the story is never quite as black and white as this.

For one thing, I expect that personal bankruptcy is rising sharply in Western Australia and regional Queensland, which is never going to be well captured by raw credit card figures. 

And it's also possible that the RBA isn't capturing various new sources of personal credit in its data. 

Still, I've looked and I can't find any substantiation for record credit card debt, unless there are some other figures I don't know about.