At the margin
An interesting data series from the Reserve Bank of Australia (RBA) charted below shows the rise and fall of margin lending accounts.
At the peak some $93 billion of securities were owned with $43 billion of margin debt against them.
Suffice to say that when the stock market crash came, both the number and value of margin lending accounts capitulated pretty quickly.
Interestingly the popularity of margin loans has never recovered, and that's despite interest rates being way lower than they were at the peak of the boom.
And margin lending won't be making a comeback any time soon - aggregate credit limits have continued to decline, now down by 47 per cent from the peak to be at their lowest level since 2005.
This is partly because CFD firms have largely replaced the drop in margin lending, with these figures not captured in the RBA's data series.
Furthermore, it has become more difficult to gear up significantly with lenders into the stock market using margin loans, whereas before the financial crisis margin lending had come to be considered to be a normal part of trading.
It's also often cheaper to use home equity to invest in stocks, which has the added advantage of no margin calls being issued.
In the December 2016 quarter the average number of margin calls per day declined to the lowest level since the beginning of 2007.
This reflects a generally rising stock market and that lenders only allow moderate leverage against all but the blue chip stocks.
Before everyone gets too complacent, the last time margin call activity was this low there was a 40-fold increase within the following eight quarters.