The Australian Bureau of Statistics (ABS) reported earlier this month that personal finance rose by 15.4% in June 2007 compared to an increase of just 1.0% for the previous month of May. The increased reliance on personal credit can largely be attributed to many individuals choosing to borrow funds to make undeducted contributions, of up to 1 million each, to their super funds before the June 30 cap.
Undeducted super contributions are contributions that individuals can make to their super fund that come back tax-free upon retirement.. After June 30, each person under 65 is capped to making no more than $450,000 in undeducted contributions over a 3 year period. The ABS reported that the June increase in personal lending was due primarily to a rise in revolving credit (up 19.1%), which was primarily made up of increased limits on existing loans, increased credit card borrowings and new loans. The July increase in revolving credit commitments follows an increase of 5.6 % for the previous month of May. The ABS also reported that fixed lending commitments increased by 11.1% in July.
On seasonally adjusted figures, personal finance borrowing has risen from $6.5 billion in April 2007 to $7.8 billion in July.