Crunch causing lending lull
Many Australians are finding it more difficult to get loans and credit cards as banks struggle to recoup losses, the Brisbane Times has claimed.
The paper reported that home loans particularly are more difficult to come by because of two reasons.
Firstly, consumers are spending less at the shops, meaning that ultimately, less money is being sent back to the banks.
Secondly, many banks are being forced to refuse home loans because more people are getting into trouble when it comes to repayments.
The paper pointed out that the number of people defaulting on their loan payments is now approaching levels last seen in 2001 when the dot-com bubble burst and Australia approached a recession.
“Banks usually respond to such conditions by tightening their lending criteria. At the same time, many small lenders are getting out of the market,” the report explained.
Meanwhile, talking to the Australian, business expert at GE Money Mike Cutter has warned consumers that it may take up to three years for Australia to recover from the credit crunch.