Consumer group blasts government's plan to ditch responsible lending laws
More than 130,000 households in Victoria and New South Wales are teetering on the edge of financial crisis due to mortgage stress, according to a new report from consumer advocacy group CHOICE.
CHOICE has released postcode data showing that significant parts of Western Sydney and Western Melbourne are already in mortgage stress as the federal government pursues a plan to ditch responsible lending laws. That plan may be dead on arrival, however, as One Nation has publicly rejected the proposal.
The 10 crisis suburbs for NSW and Victoria represent more than 130,000 households, according to CHOICE. The top 10 suburbs nationally for mortgage stress cover urban and regional areas in NSW, Victoria, Queensland and Western Australia.
“These are households where from fortnight to fortnight, people are spending more than they are earning,” said CHOICE CEO Alan Kirkland. “That means that they have to make difficult choices, like whether to put food on the table or keep up with repayments. If they can’t maintain the juggling act, they risk losing their homes.”
Kirkland blasted the government’s plan to roll back responsible lending rules.
“Safe lending laws were put in place to avoid the huge damage to families and communities caused by mortgage stress, by making banks take care to avoid giving people loans they won’t be able to afford to repay,” he said. “If the government gets away with its plan to axe safe lending laws, people who are desperate to get into a rising housing market will be at risk of overexposure, and people who need to refinance won’t be adequately protected. We’re glad to see more and more senators – most recently Senator [Pauline] Hanson – stand up to the banks and the government. Many people are still doing it tough, and need laws that protect them from the bad bank behaviour that led to the banking royal commission.”
The repeal of safe lending laws has been stymied in the Senate, with the legislation – originally scheduled for December – repeatedly failing to progress, and a growing number of senators vowing to block the changes. Hanson, party leader of One Nation, came out against the repeal last week.
“We call upon the government to ditch its irresponsible plan,” Kirkland said. “Now is not the time to give more power to the banks.”
