Margin lending calls up, Number of investors down

Investors aboard the borrow to invest, get rich quick trainare finally jumping off, or more to the point falling off, with the number of open margin lending accounts declining in the September quarter, for the first time since the Reserve Bank of Australia (RBA) began publishing margin lending data in 2000.

Open margin lending accounts fell 2 per cent to 202,200, as investors with leveraging in mind are not just sitting on the sidelines waiting to re-enter, but totally exiting the market by closing accounts.

Client account growth had been rapid in recent years, increasing 5 per cent in the year to September 2008, 26 per cent in the last two years and 44 per cent in the last three.

The aggregate credit limit declined by 4 per cent to $71 billion, as expected due to account closures, but also indicating those margin lenders remaining in the market are not increasing lending limits.

Margin calls of 4.32 per day per 1,000 clients in the September quarter were over double the 1.75 the June quarter, and four times the 1.04 in the corresponding period a year before.

The full story at Financial Services Review