In 2025, personal loan application activity hit previously unheard-of heights, reflecting both changing financial habits and growing challenges from the expense of living among middle-aged Australians. Despite rising borrowing costs, research indicates that people in their 40s are significantly increasing the nation’s appetite for credit.

Australians took out $9.04 billion in fixed-term personal loans in the June quarter of 2025, according to the most recent data from the Australian Bureau of Statistics. The largest percentage of all personal loan applications (31%), of any age category, came from borrowers between the ages of 40 and 49.

This increase has continued even as average unsecured loan interest rates have increased to 13.87% annually, indicating that personal credit solutions are becoming more and more necessary as financial commitments like mortgages, school bills, and family spending continue to outstrip income growth.

Demographic Analysis: Understanding the 40s Borrowing Surge

Personal loan applications are most common among those in their 40s (31%), followed by those in their 30s (25%), and those in their 50s (22%), according to data from personal loan provider Plenti. Australians under 60 make up only 6% of applications, and younger Australians make up only 15% of loans.

The typical borrower profile shows important trends. Forty-five percent of people who apply for personal loans are homeowners with current mortgages, and 46 percent make between $50,000 and $100,000 a year.

Financial companies like CashLend have noticed this change in the population, as evidenced by the steady increase in applications from people in the 40–49 age range in 2025. This group consists of people who have reached their maximum earning potential but are nevertheless dealing with significant debt on several fronts.

The 40-year-old demographic is in a special economic position. In addition to managing their mortgage obligations, these borrowers frequently support dependent children and, more often, elderly parents financially. This financial responsibility across generations and ongoing cost-of-living hikes put household finances under previously unheard-of strain.

Changing the Way People Borrow: From Optional to Necessary

Analysing loan reasons reveals significant shifts in how people borrow money. Consolidation accounts for 51.92% of all personal loan applications, suggesting that borrowers are looking to manage their current debts rather than finance new purchases. The last two key categories, which are categorised as necessary rather than optional, are car purchases and home renovations.

This change from lifestyle and investment borrowing to applications driven by necessity represents a substantial divergence from past trends. According to the trend, customers are being forced to consolidate their existing loans due to economic stress, which may be a sign of increased financial fragility among Australian households.

Record Borrowing Amid Rising Costs

The $9.04 billion borrowed in June 2025 excludes an additional $1.66 billion in refinancing activity. This represents sustained growth since June 2020 following pandemic-related contraction.

Key Figures:

• Average loan amount: $22,643
• Typical loan term: 35.4 months
• Average weekly repayment: $178

Regional variations provide additional insight into borrowing habits. Australian Capital Territory borrowers request the largest amounts at $30,388 on average. South Australian residents follow at $26,266.

Northern Territory borrowers request the smallest amounts at $19,168. These differences reflect varying economic conditions and cost structures across jurisdictions. The sustained growth despite high interest rates raises concerns about household financial resilience.

Understanding Current Interest Rates

Personal loan interest rates remain elevated compared to other lending products. October 2025 data shows secured loans averaging 9.65% while unsecured loans average 10.65%. Credit scoring dramatically impacts available rates. Borrowers with excellent credit can access rates near 9.79%. Those with poor credit scores (0-459 range) face rates approaching 25.25%.

The Reserve Bank of Australia reduced the official cash rate three times during 2025. Cuts occurred in February, May and August, bringing the rate to 3.60%. However, personal loan rates have not declined proportionally. Several factors explain this disconnect.

Personal loans carry higher risk profiles than secured lending products with no collateral backing the debt. Lenders also employ risk-based pricing models that assess each applicant individually. CashLend and other industry participants utilise sophisticated credit assessment frameworks. These evaluate multiple risk factors beyond base rate considerations.

Strategic Approaches for BorrowersCredit Score Matters

Your credit score represents the primary determinant of available interest rates. Prospective borrowers should obtain credit reports before making any application. Improving your credit score can generate substantial interest savings.

Maintaining consistent bill payment histories helps. Reducing credit utilisation ratios makes a difference. Correcting reporting errors proves valuable. Even modest score improvements can shift applicants into lower rate categories. This potentially saves thousands in interest charges over loan terms.

Comparison Shopping Is Essential

Personal loan application processes require strategic thinking. Each lender offers different rates based on their specific assessment criteria and risk appetite. Financial experts recommend obtaining quotes from multiple providers.

Typically three to five comparisons provide adequate market insight. Most lenders offer preliminary rate assessments through soft credit inquiries. These do not impact credit scores. This allows applicants to compare actual offered rates rather than advertised rates.

Critical Assessment Factors:

• Total borrowing cost including all fees and interest charges
• Comparison rates reflecting true loan cost
• Fee structures (establishment, monthly and exit fees)
• Flexibility provisions for additional repayments
• Early repayment terms and potential penalties

Warning Signs to Watch

1. Certain lending characteristics warrant caution. Establishment and ongoing fees exceeding 5% of loan principal represent above-average costs.
2. Pressure to borrow larger amounts than requested should raise concerns. Unclear fee disclosures or “guaranteed approval” marketing indicate questionable lending practices.
3. Affordability assessment must extend beyond basic serviceability calculations. Stress-test your budget against potential income disruptions or expense increases.

Alternative Financing Options

Before proceeding with a personal loan application, evaluate alternative approaches. Homeowners with mortgage redraw or offset facilities may access lower-cost finance through existing home loans.

Balance transfer credit cards offering promotional interest periods can provide cost-effective debt consolidation. This works best for disciplined borrowers who can repay within the promotional timeframe.

Direct negotiation with creditors may yield payment arrangements or hardship provisions. This avoids interest charges entirely in some cases.

Support Resources:

1. National Debt Helpline: 1800 007 007 (free financial counseling)
2. No-interest loan schemes for essential purchases
3. Low-interest loan programs targeting low-income households
4. Community organisation assistance programs

Looking Ahead

Market analysis projects continued growth in Australian personal lending. Forecasts indicate potential expansion to $13.16 billion by 2034. This represents a 23% compound annual growth rate. Digital lending platforms continue gaining market share. This may drive increased competition and improved rate offerings for consumers.

The current trend toward essential rather than discretionary borrowing appears likely to persist. Cost-of-living pressures show no signs of easing in the near term. As millennials transition into their 40s, demographic factors may further increase demand. This could intensify competition for creditworthy borrowers among lenders. Regulatory oversight of responsible lending practices continues strengthening. Increased focus on affordability assessments and suitability determinations aims to protect consumers.

Conclusions: Navigating Complex Lending Decisions

Not greater prosperity, but broader economic stresses are the reason behind record personal loan application volumes among Australians in their 40s. Despite RBA rate cuts, average rates are still high at 13.87%, meaning that borrowers must pay a high price for loans.

When applying for a personal loan, potential borrowers should take a calculated approach, comparing offers from several lenders, getting thorough credit evaluations, and carefully weighing their options. Free counseling programs and expert financial help are excellent resources for complicated borrowing decisions.

Economic challenges, high borrowing prices, and demographic considerations all combine to make life difficult for Australian households. To effectively manage debt while preserving long-term financial stability, careful comparison, realistic affordability assessment, and informed decision-making are still crucial.