While the number of Australians using margin loans decreased by 4% in 2015 based on RBA figures, the total margin debt increased by 4%.
In dollar terms, the average margin loan increased by 8% in 2015 to $180,000. What this indicates is the remaining margin debtors in the sector are increasing the amount they're borrowing, which reflects Investment Trends' modelling in its 2015 Margin Lending Investor Report. The report says investors are seeing the "undervalued" Australian share market as a gearing opportunity.
Based on a survey of 2038 Australian investors (and ongoing modelling based on prior research), the new report shows that 56% of current margin debtors agree Australian shares are undervalued, and only 13% believe volatility is a preventative factor in increasing margin debt.
Furthermore Australians appear to be increasingly satisfied with their margin lenders, giving high ratings across Investment Trends' "key satisfaction drivers". The report added that this "has translated into satisfaction with margin lenders returning to pre-GFC levels." In this regard, Leveraged, CommSec and BT Margin Lending were the most popular options.
The report also estimated that there are a further 96,000 investors who intend to take on margin loans over the next 12 months.
"Margin lending investors as a group tend to be the most optimistic in their share market outlook, and recent share market falls are seen as investment opportunities for many," said Investment Trends head of research for wealth management Recep Peker.
He added, "For advisers involved with margin lending, it is important to note that how investors use margin lending is evolving - they are becoming more technical in their approach to margin lending.
"More are recognising the tax benefits of margin lending, seeing it as a part of their broader portfolio strategy, and understanding they can use it for assets other than just direct shares."