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New Primara research suggests Australians are cutting credit card limits to boost home loan eligibility, pushing total limits to their lowest level since 2008. Even unused credit limits can materially reduce borrowing power, making them a critical factor for first home buyers using the 5% Deposit Scheme, where margins are tight and small changes can determine whether a purchase is possible.
New analysis of Reserve Bank of Australia data reveals total personal credit card limits have dropped to $109.67 billion, the lowest level since 2008, despite Australians spending a record $342 billion annually on their credit cards.
The trend reflects a calculated shift by borrowers seeking to maximise their home loan eligibility.
- $109.67 billion total personal credit card limits, the lowest level since 2008
- $342 billion annual credit card spending by Australians (record high)
First Home Buyers face razor-thin margins
With buyers using the newly expanded 5% Deposit Scheme needing to borrow $801,800 to cover 95% of the median purchase price, unused credit card limits can be the difference between securing a property and missing out entirely.
The data reveals a split market. Credit card balances accruing interest dropped in October after hitting a four-year high the previous month, but remain elevated year-on-year.
Credit limits have fallen consistently since peaking in 2018, as Australians prioritise mortgage eligibility over credit access.
